Google Search Trends That Tell Us About the State of the Economy

Nicholas Colas, chief market strategist at brokerage Convergex, turned to Google Trends to analyze search phrases about the state of the economy, the jobs markets and inflation. He concluded that the data from the search tool agrees with Fed Chair Janet Yellen on much of her assessment of the U.S. economy.

“Google Trend data points to a Fed rate increase later this month, even if this isn’t the kind of data that the Federal Reserve means when it says it is ‘Data dependent,’” said Colas according to WSJ.

When it comes to the overall state of the economy, one of the search terms Colas looked at was how frequently users searched for “vacation.” He said nothing says consumer discretionary spending like a well-planned vacation. As the chart below highlights, traffic for the topic is just starting to improve after steadily declining since the financial crisis.





To look at the labor market, Colas searched “quit my job” and found the traffic for that phrase to be increasing too. Workers quitting their jobs is generally considered a positive sign for the economy as people are presumably leaving for better work or because they have more confidence they will be able to find another job.




In regards to inflation, Google Trends data is consistent with official data releases: inflation remains low. When typing “cheap” into the “explore topics” field in Google Trends, users notice a steady decline in the word’s traffic over the past decade.



 Colas wrote that people usually search “cheap” when they’re watching their pennies because of rising prices.

(via WSJ)