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Constructing Consumer Sentiment Index for U.S. Using Google Searches

Nicolás Della Penna and Haifang Huang ()

No 2009-26, Working Papers from University of Alberta, Department of Economics

Abstract: We construct a consumer sentiment index for the U.S. using the popularity trends of selected Google searches. The final index consists of four components and is highly correlated with the Index of Consumer Sentiment from the University of Michigan and the Consumer Confidence Index from the Conference Board. Among the three sentiment indices, the Google search-based index (SBI) leads in time and predicts other indices. In terms of forecasting consumer spending, the SBI outperforms both the ICS and the CCI and provides independent information. For robustness, we use multiple measures of consumer spending and a range of statistical specifications. The finding is robust.

Keywords: consumer sentiment; consumer confidence; leading economic indicators (search for similar items in EconPapers)
JEL-codes: C53 E21 E27 (search for similar items in EconPapers)
Date: 2009-10-01, Revised 2010-02-01
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Handle: RePEc:ris:albaec:2009_026