I doubt the recession is the main reason for low #s,i was about to quit also, and i know many many players who canceled account for arena split, caps, unbalanced gaming and a lack of game goal. Also,the squads are the basic organized cells in this game like families for a growing society, the settings over past years dissolved squads, can't play in the same arena and was no reason for organized team fight because was nothing to fight for ,only the score . This settings are great now, but more strategy would be fun; HQ /strats destroyed should affect country resources and be part of map reset/ win war, encourage large scale fights/ raids.
I think - and I might be wrong, it's just a shot in the dark - that the split arena and the caps weren't a problem initially, but as the numbers started to decline due to the economy, they became a problem on their own.
For a about two years after the split numbers were high (mostly higher than before the split), and caps were annoying but not that much of a problem, as there were always two LW arenas with sufficient action, no "empty rooms".
But when the number began to drop (about autumn/winter 20008) the rigid caps, with their basically unchanged times and trigger levels, stood more and more in the way of players trying to get action at "unlucky" times. We Euro players do remember 180/100 - 20/200 in the evening. Where it once took 1 hour to normalize it ended up last year with up to 4 hours "downtime".
And it is my believe that at this point the caps, which once worked "fine" (well, more or less) did start to be a serious problem. And note that the "loss" of players (measured in terms of activity in the arenas) began to accelerate in 2010. It might be because of what I just described.
But of course - I just speculate, but do not
know