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Forecasting private consumption with Google Trends data
Author(s) -
Woo Jaemin,
Owen Ann L.
Publication year - 2019
Publication title -
journal of forecasting
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.543
H-Index - 59
eISSN - 1099-131X
pISSN - 0277-6693
DOI - 10.1002/for.2559
Subject(s) - consumption (sociology) , private consumption , consumer spending , big data , computer science , economics , data mining , social science , recession , sociology , keynesian economics , fiscal policy , macroeconomics
This paper examines the predictive relationship of consumption‐related and news‐related Google Trends data to changes in private consumption in the USA. The results suggest that (1) Google Trends‐augmented models provide additional information about consumption over and above survey‐based consumer sentiment indicators, (2) consumption‐related Google Trends data provide information about pre‐consumption research trends, (3) news‐related Google Trends data provide information about changes in durable goods consumption, and (4) the combination of news and consumption‐related data significantly improves forecasting models. We demonstrate that applying these insights improves forecasts of private consumption growth over forecasts that do not utilize Google Trends data and over forecasts that use Google Trends data, but do not take into account the specific ways in which it informs forecasts.