Forecasting private consumption: survey-based indicators vs. Google trends
Article first published online: 13 JAN 2011
Copyright © 2011 John Wiley & Sons, Ltd.
Journal of Forecasting
Volume 30, Issue 6, pages 565–578, September 2011
How to Cite
Vosen, S. and Schmidt, T. (2011), Forecasting private consumption: survey-based indicators vs. Google trends. J. Forecast., 30: 565–578. doi: 10.1002/for.1213
- Issue published online: 15 AUG 2011
- Article first published online: 13 JAN 2011
- Google Trends;
- private consumption;
- consumer sentiment indicators
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. Copyright © 2011 John Wiley & Sons, Ltd.