The Wall Street Journal-20080129-Ahead of the Tape

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Ahead of the Tape

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It's Not Time

To Judge

Bernanke Yet

Ben Bernanke can't get a break.

Two weeks ago, the Federal Reserve chairman's critics complained he was standing idly by while the markets sank, and they clamored for more-aggressive action. Last week, when he did what they asked, they called him a pawn of fickle investors. Had he done nothing, the same critics probably would have said he was ignoring the potential economic damage of a stock-market collapse.

In the end, all this hand-wringing about Mr. Bernanke's style and demeanor will be long forgotten if the Princeton professor gets his economics right. He's betting he can head off a recession by quickly lowering interest rates, possibly again tomorrow after the Fed meets. And he's betting he can do it without igniting inflation.

It's a stark choice and stands in clear contrast to his counterpart at the European Central Bank, Jean Claude Trichet. Mr. Trichet, who says he's more worried about inflation, hasn't moved rates at all.

It probably doesn't help Mr. Bernanke that he has to manage the situation while his former boss, Alan Greenspan, and potential successor, Lawrence Summers, chime in with opinions from places like Davos and from book tours.

If the U.S. economy somehow gets out of this mess without a recession and with inflation under control, Mr. Bernanke will be a hero regardless of what market critics say now. Wall Street might give his policies a chance before writing him off.

For Google and Yahoo,

It's a Click Conundrum

Investors have been betting that Internet ads will be immune to any broader advertising weakness. Maybe it's time to reconsider.

Internet firms and online-ad experts see companies continuing to shift ad dollars online. They also see boosts from the Olympics and presidential election. But recent data on Web-search ads raise questions that Yahoo and Google might address when reporting earnings today and Thursday, respectively.

The data come from comScore Inc., which last week reported a 7% decline in the number of times U.S. consumers clicked on ads appearing alongside Google's search results in December compared to November. That contrasts with a 6% increase in 2006 from November to December.

"This whole idea of the Internet not being as impacted and Google not being as impacted was really holding up well until December," says John Aiken, managing director of Majestic Research Corp. in New York. "Then we started to see a rate of deterioration that was faster than what you'd normally expect."

It could be part of a U.S. consumer slowdown. But comScore's James Lamberti cautions against reading too much into one month's numbers. ComScore says Google has had soft Decembers. Moreover, many analysts still see strong search-ad spending internationally, and some predict U.S. search revenue will rise as advertisers increase what they'll pay per click.

Still, some industry executives acknowledge they're not immune to the economy. Microsoft's Avenue A/Razorfish unit says spending by its clients on search ads increased 31% in the fourth quarter from the third. Yet Jeff Lanctot, its senior vice president, says, "there's a possibility that the search category softens if people are searching and clicking less."

-- Kevin J. Delaney

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