Is another recession on the horizon? Google search data has some clues.

Last month, the level of current-year recession searches for the first time surpassed the numbers seen during the Great Recession (2008). The spike was probably driven by news of an inverted yield curve, a classic signal that a recession is on the way.

Other recession-related Google searches revealed similar patterns. “Recession signs,” “recession indicators” and “recession investments” all rose to levels not seen since the 2007-2008 recession. Although economists continue to rely heavily on traditional indicators such as Treasury yields, gross domestic product and confidence indexes to read the recessionary tea leaves, some experts are looking to incorporate newer data sources, such as Google searches, to glean even faster insights into the health of the economy.

Some analysts, for instance, have been using search terms such as “unemployment” and “coupon” to suss out future recession probabilities. Google’s chief economist, Hal Varian, has noted correlations between searches such as “social security locations” and “unemployment office” and recessionary factors.

The big challenge in crafting useful real-world predictions out of Google searches is that, methodology-wise, economists are starting from scratch. There’s a ton of uncertainty between the words typed into a search engine and the real-world circumstances that prompted that query.

Read more: https://www.washingtonpost.com/business/2019/09/06/is-another-recession-horizon-google-search-data-has-some-clues/

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