A study by DataTrek Research compared the evolution of specific searches on Google associated with periods of stagnation and economic recession, concluding that North Americans manifest behaviors typical of a robust economy.
Google searches associated with negative terms have been declining during the last years. DataTrek explains that they only used data from 2004 to 2019 for the research.
A solid economy is generally associated with good working conditions and good quality of life.
According to DataTrek, leisure-related terms such as TV, YouTube, and Netflix reached historical peaks at the end of the last decade.
Since 2010 the trend stabilized. But this can be explained by the rising number of smartphones, smart TVs and other inventions that make it unnecessary to search for such terms.
The study also concluded that Americans do not fear an economic crisis. Searches on Google for the term “Coupon” have steadily declined since 2012. Before this, it was continually rising, especially from 2005 to 2008.
Coincidentally this episode led to the creation of Bitcoin.
In general terms, the public should be more interested in getting discounts during times of recession, unemployment or inflation; however, in the past few years, there has been no significant interest among Americans to get these offers from Google
It also seems that the concern for eventual layoffs is not in the minds of most Americans. Searches on Google related to “unemployment” have remained stable compared to 2018 and have decreased over the last decade.
DataTrek says these results are characteristic of a stable economy and a change in the monetary policy would not be as necessary as many politicians think, – should Google trends be correlated with the actual economic situation:
Summing up: if the Federal Reserve looked at Google Trends, they might not be so inclined to cut rates next week.
Several economists and financial analysts share an optimistic view of the US economy, and Tom Lee is one of them. In an interview for Yahoo Finance, CEO of Fundstrat explained:
“We’ve studied past FED cuts, and as long as the Leading Economic Indicators are positive, it has a huge effect. But at the moment, there are some funky things happening in the credit markets that a Fed cut would really ease.”
The theory of rational expectations could be used to explain the relationship between Google searches and the current state of the economy. According to this concept, people’s current expectations can influence the future state of the economy.
Applying this concept to everyday life could mean DataTrek’s results are good news, and America is not going to wind up in a recession any time soon.
Last modified: June 23, 2020 2:39 PM UTC