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

23 Pages Posted: 30 Nov 2009

See all articles by Torsten Schmidt

Torsten Schmidt

Rhine-Westphalia Institute for Economic Research (RWI)

Simeon Vosen

Rhine-Westphalia Institute for Economic Research (RWI-Essen)

Date Written: November 2009

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

JEL Classification: C53, E21, E27

Suggested Citation

Schmidt, Torsten and Vosen, Simeon, Forecasting Private Consumption: Survey-Based Indicators vs. Google Trends (November 2009). Ruhr Economic Paper No. 155. Available at SSRN: https://ssrn.com/abstract=1514369 or http://dx.doi.org/10.2139/ssrn.1514369

Torsten Schmidt

Rhine-Westphalia Institute for Economic Research (RWI) ( email )

45128 Essen
Germany

Simeon Vosen (Contact Author)

Rhine-Westphalia Institute for Economic Research (RWI-Essen) ( email )

Hohenzollernstr. 1-3
Essen, 45128
Germany
0049 201 8149 263 (Phone)
0049 201 8149 300 (Fax)

Register to save articles to
your library

Register

Paper statistics

Downloads
520
Abstract Views
3,043
rank
52,755
PlumX Metrics