Google’s “Insights for Search” product allows users to view the number of web searches for a given search term over time and by geography. The Wall Street Journal explores how this might predict the likelihood of another recessionary cycle:
Google searches for “double dip recession” have shot up in the past two weeks. “In the first two weeks of June the number of Google searches for ‘double dip recession’ by Americans has surged back towards the levels seen when such concerns were rife this time last year,” notes Paul Dales of Capital Economics.
In a previous WSJ article, Ainsley Thomson explores about how Insights for Search provides indicators for the housing market and unemployment that are as accurate (or even more accurate) than traditional indicators:
According to research from economists at the Bank of England, the words that people search on Google can provide a reliable, and timely, indicator of economic activity. And not only can Internet searches help predict results, but the research shows they can also provide a better understanding of some economic issues.
Using Google’s search data, the BOE’s Nick McLaren and Rachana Shanbhogue compared the occurrence of key words, such as “unemployed” and “house prices,” against official data for the labor and housing markets. The results showed Internet search terms are as accurate as traditional indicators at predicting trends; indeed, for the housing market they are even more accurate.
If this is any indication of the accuracy of the double dip recession searches, we may be in for a rough ride!
Sources:
“What Google Can Tell Us About a Double Dip Recession” Phil Izzo. Wall Street Journal, 6/17. https://blogs.wsj.com/economics/2011/06/17/what-google-can-tell-us-about-a-double-dip/
“Google Can Help Predict House Prices, Unemployment” Ainsley Thomson. Wall Street Journal, 6/13. https://blogs.wsj.com/economics/2011/06/13/google-can-help-predict-house-prices-unemployment/
