The State of the Economy According to Google Trends

June 28, 2010 in Markets

I’m a sucker for Google Trends.  Ever since it first came out, I’ve loved to have fun with it.

Recently, I’ve noticed the word “double dip” seriously infiltrate the collective vocabulary and wondered what Google Trends had to say about it.  My suspicions were correct, as we’ve seen a massive spike in search traffic and news reference regarding this recently:

Compare this to the chart for “recession” during late-2007.  Similar spike on search volume and news reference:

Couple this with a nice spike in “unemployment” (which has been a pretty decent reliable indicator) and things look pretty bleak.

In some instances, searches are a great contrary indicator, such as for investments (look at the 2008 spike for Gold as an example).  For economic related searches they are many times leading.  Look at the spike for “recession” in late 2007.  While things were a bit rocky then, we weren’t in the throes in the recession.  In fact, the Google Trend for “recession” had stabilized by the time the recession ended. Since Google Searches are conducted by real people, when nobody is watching, I believe they are a great look into the mindset of the average individual, and right now appear to be painting a bit of a scary picture.