Forecasting Private Consumption: Survey-based Indicators vs. Google Trends

Torsten Schmidt and Simeon Vosen

No 155, Ruhr Economic Papers from RWI - Leibniz-Institut für Wirtschaftsforschung, Ruhr-University Bochum, TU Dortmund University, University of Duisburg-Essen

Abstract: In this study we introduce a new indicator for private consumption based on search query time series provided by Google Trends. The indicator is based on factors extracted from consumption-related search categories of the Google Trends application Insights for Search. The forecasting performance of the new indicator is assessed relative to the two most common survey-based indicators - the University of Michigan Consumer Sentiment Index and the Conference Board Consumer Confidence Index. The results show that in almost all conducted in-sample and out-of-sample forecasting experiments the Google indicator outperforms the survey-based indicators. This suggests that incorporating information from Google Trends may offer significant benefits to forecasters of private consumption.

Keywords: Google Trends; private consumption; forecasting; Consumer Sentiment Indicator (search for similar items in EconPapers)
JEL-codes: C53 E21 E27 (search for similar items in EconPapers)
Date: 2009
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Citations: View citations in EconPapers (21)

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Related works:
Journal Article: Forecasting private consumption: survey‐based indicators vs. Google trends (2011)
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Persistent link: https://EconPapers.repec.org/RePEc:zbw:rwirep:155

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