How To Predict Economic Data Using Google

Most people have heard of the Google Flu Trends, where the search giant uses searches for cold medicine to show where and how many people are getting sick.

Now, the New York Federal Reserve has applied this concept to economic data. Using Google Insight, the Fed shows how trends in certain search terms show highly significant correlation with housing data, dollar-renminbi exchange rates, and German unemployment.

One amazing graph shows how searching for “mortgage refinance” in real-time corresponds with  refinancing application data published weeks later:


Photo: Liberty Street Economics

The Fed also found research showing how one percentage-point increase in housing searches correlated with additional sales of 67,220 homes in the following quarter.

Unfortunately, Google failed to predict European sovereign spreads, interbank lending rates or, alas, gold prices, the Fed said.

You can read the whole study at >

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