Inflection Point For MBA Programs

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Here's another indicator that the smart money believes the economic and financial market recovery has legs: the trend in the number of people registering to take the MBA school admissions exam abruptly leveled off after a period of explosive growth.

The Graduate Management Admission Council reports Wednesday that registrations for the Graduate Management Admission Test (GMAT) edged up just 1 percent in 2009, to 301,800 from 298,734 in 2008. That's a dramatic deceleration from a year ago, when GMAT registrations spiked more than 10 percent from 2007 to 2008.

In December, the council estimated the number of people actually taking the GMAT during calendar 2009 likewise rose 1 percent from 2008, to a record 267,000. Excluding citizens of China and India, whose representation swelled 35 percent and 7 percent respectively to account for a combined 20 percent of the global GMAT test population, the total for the rest of the world fell about 3 percent in 2009.

Counter-Indicator For Business Cycle

Applications to MBA programs and its precursor, the GMAT, historically are negatively correlated with the ups and downs of the business cycle. Typically, people take a break from their careers to attend business school when they feel job or advancement prospects will be poor for the next couple of years. Conversely, when career opportunities appear strong going forward, fewer people are willing to interrupt their career path to get an MBA.

Last year's flat exam registration numbers may foreshadow a further deceleration or outright decline in the number of people who will take the GMAT this academic year. During the 2008-09 academic year ended June 30, the number of test-takers climbed 7.6 percent to a record 265,613. But the rate of growth slowed from 12.7 percent for the year ended June 30, 2008 - which was the fastest pace since the 2001-02 academic year, when the U.S. was in the throes of the previous recession and market downturn. (The test-taking population declined each of the next three years, as the economy advanced.)

So, notwithstanding the council's breezy announcement that "GMAT Registration Levels Hit New Record in 2009," the numbers actually point to a softening in both exam volume and, most likely, MBA program applications. But the good news is, that's yet another market signal that the business and financial world is returning to health.

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