Thursday, September 3, 2009 at 3:38 PM
We are really excited to launch Google Domestic Trends on Google Finance. This launch was inspired by Hal Varian, our chief economist's research on using Google Trends data to predict economic indicators.
Google Domestic Trends tracks Google search traffic across specific sectors of the economy. The changes in the search volume of a given sector on google.com may provide useful economic insight. We have created 23 indexes that track the major economic sectors, such as retail, auto and unemployment. Each index value is baselined at 1.0 on January 1, 2004 and is calculated and displayed on the Google Finance charts as a 7-day moving average. You can easily compare actual stocks and market indexes to these Google Trends on the charts.
For example, the Google Unemployment Index tracks queries like [unemployment], [social security], [unemployment benefits] and so forth. We see that as the recession took hold in the latter half of 2008, this index increased quite dramatically.
Predicting real-world statistics
We wondered if Google search volumes in a month can help better predict real world statistics well before they are officially tabulated and released.
Predicting retail sales
The US Census Bureau releases the Advance Monthly Retail Sales survey 1–2 weeks after the close of each month. These figures are based on a mail survey from a number of retail establishments and are thought to be useful leading indicators of macroeconomic performance. Learn more about the survey and the procedures followed in constructing these numbers.
The retail sales data is organized according to the NAICS retail trade categories. The data is reported in both seasonally adjusted and unadjusted form; for the analysis in this section, we use only the unadjusted data for the NAICS category 448 (clothing and clothing accessories stores).
Google Domestic Trends data
The Google Retail Index tracks query volumes on Google.com related to the retail trade category. Sample queries are [retail], [bags], [retail sales] and so forth. For this analysis we use the index value (30 day moving average) in the middle of the month. Thus, to predict retail sales of March, 2008 we use the index value on March 15th, 2008.
We observe that the Mean Absolute Error improves from 6.52% to 3.65% (an improvement of 44%)!
You can read more about Hal's research on using Google Trends data to predict economic activities on the Google Research Blog.
The data for these indexes are available for download — so you can use it with your own models. If you find interesting patterns and uses, feel free to share with us!
19 comments:
Is there any explanation to the recent spike in Advertising & Marketing Index (from 0.7 to double that in just a few months)? Looks like a glitch...
I would like to suggest adjusting your data for seasonal trends and using the seasonally-adjusted annual data released by the government (such as in advance retail sales). The data are much more useful that way.
I agree with DaleW. Adding government data is probably more useful for me.
how can i contact someone at google finance? there is a company that started trading and it is not listed. thanks.
Definitely a nice add to Google Finance.
These kinds of analyses are built further on www.MarketsWithSearch.com (not Google endorsed)
Problem is, one an economic trend is pekaing out on google, it has probably already peaked as an investment and is about to go abck down. Not tradeable information.
The problem is, people are usually googling a specific economic trend after it has already peaked, or is about to peak. probably not tradeable information.
Like Reedcat mentioned, there is an ODD spike in the Ad & Marketing index, doubled in just a few months).
I believe, for some reason, the index is using "Jaycee" as a index keyword. The top 10 searches include Jaycee, Jaycee duggard and another jaycee duggard one that is slightly diff. I tried to filter with a -jaycee, but can't seem to get it to redo the entire index chart. Maybe Google needs to rethink having that KW in the index for right now?
I have been unable to do comparison in the charts? Is there a reason why I get a blank screen after it says "loading" everytime I want to compare an index or stock? It happens not just on the trends page but also in other finance pages.
I came across this section today and was extremely excited by it. I was wondering if there were any indicators that could predict consumer sentiment, or perhaps sentiment towards the stock market?
I have lost the ability to screen stocks on the Hong Kong exchange using an English version of Google finance. I can only screen Hong Kong stocks in the Hong Kong version of Google Finance but it is all in Chinese!
Its very tradable information if you short.
Nice add. I agree with DaleW as well regarding government data.
Any chance we'll ever see commodity prices added too?
Why isn't there a category related to health care?
On http://www.google.com/finance/domestic_trends the Google retail index is compared to clothing store sales. The caption reads:
"there are seasonal spikes in clothing store sales, but over time there has been a pronounced decrease."
However, the graph shows no overall decrease. After removing seasonal variations and smoothing, clothing store sales form a convex curve
On the other hand, the rate of change of sales is negative. Therefore, the change of clothing sales is what formally matches the Google retail index.
Perhaps people search most when their motivation changes. Then product searches are capturing changes in buyer behavior, not the behavior itself.
This is a brilliant idea. Trends become very apparent and should be able to help companies and individuals better plan for the future. Has any one thought about being able to make this index a tradable index? (ie people being able to go long/short) It would be interesting to see how someone would be able to market make on an index like this. As well, how people would reduce manipulation of the index.
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