Two New Economic Indicators

There is a fascin

swift

ating article in the RBA’s quarterly bulletin released today.

unemployment indicator

It discusses and examines how high-frequency financial data and real-time search engine results can yield powerful insights into the economy.

It examines several promising data points but two that stand out are payments through the SWIFT banking system. The volume of transactions (rather than the value) appears to provide a good read on economic growth. (that yellow line is headed in the wrong direction)

The second is Google search data. This idea first came to prominence a few years ago when researchers demonstrated that keyword searches for ‘the flu’ provided an astoundingly accurate tracking method for outbreaks.

It shows similar promise for tracking unemployment and retail spending.

For me, this is fertile ground for useful economic research and the best traders are probably already tapping it.

I’m in a bit over my head on some of the details but I firmly believe that within 20 years the entire statistical landscape will have shifted toward this type of data. Stay ahead of the curve.

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