Using Google to Predict the Future
Elegantly simple proposal to measure economic confidence in The Economist’s search for other quirky indicators: searches in the U.S. on Google for “gold price” in the piece Alternative indicators: Behind the bald figures
But the hottest tip came from Edward Ritchie, an investment analyst in London. He tracks Google searches for the “gold price” as an indicator of economic confidence. This does not follow the gold price itself. For example, during most of 2008 when the world’s financial system was melting down, the gold price tumbled yet the number of searches soared. The number of gold-price searches shoots up when American consumer confidence dives and subsides when households perk up again (see chart). That makes it a handy device for spotting turning-points in economic confidence, with the added advantage that the data are available earlier than for conventional survey-based figures. Worryingly, the number of searches has recently vaulted above its 2008 peak, signalling the possibility of a double dip.”
Here’s the graph:
I’m a big fan of using Google search to measure, track and predict things. A few of my previous posts on the matter. And no, I’ve not made any money so far out of this crystal ball.
Googles Suicide Watch: where I googled the word “suicide”
And this one from 2006: Mapping Trends With Google