Is Google Ready to Make (Unpleasant) History?

I vow to provide some upbeat news here sooner than later. But until then, here’s another downbeat data point, from Citibank’s (C) Mark Mahaney: He predicts that search advertising, which has been the one dependable growth business during the econalypse, may be ready to start dropping, too.

Mahaney reaches this conclusion after chatting up industry insiders at a search industry marketing confab in Park City, Utah (someone has to go to these things). In a nutshell, he has something approaching a gut feeling that next quarter may be the first time in the history of search that the industry doesn’t actually grow. In analyst-speak, “Q1 could actually be the real inflection point quarter–i.e., the first negative sequential growth quarter ever for Search.”

The longer version, from his note:

The representative comment that took us down this path came from several of the most experienced SEM [search engine marketing] execs, who noted that Q4 Search budgets were set two months ago, but that 2009 Search commitments had not yet been finalized. We sensed specific nervousness about the Q1 outlook and the possibility that Q1 could actually be the real inflection point quarter–i.e. the first negative sequential growth quarter ever for Search.

At some level, we also believe that recent Google executive comments and actions reflect this materially challenged 2009 outlook. Not to act as Kremlinologists, but we sensed a fundamentally different tone in CEO Eric Schmidt’s comment to the Wall St. Journal this past week: ‘We have to behave as though we don’t know what’s going to happen.’ We actually believe that Google–given its massive size and presence in everyday activity–has one of the best real-time reads into consumer sentiment and intentions. Google’s database of over a billion daily searches surely provides tremendous insight into near-term economic, cultural, and political trends.”

But Mahaney’s not ready to go all the way: He’s still predicting that Google (GOOG) will see revenues grow two percent in the next quarter, and 11 percent during the next year. And he’s still bullish on the stock and on search in general. His argument: Even if search hits a bumpy patch, it (and by extension, Google) is still likely to grow during the recession. And what other media business can say that?