Analysts and economists are using Google Search and Google Trends data to determine the economic status of the United States since the government shutdown and since the Commerce Department’s December retail report missed its scheduled January 16 release date.
Indeed, it is an unorthodox method, as Bloomberg refers to it -- but apparently it works.
Search engine queries suggest that retail sales rose -- excluding gas and autos, which sequentially rose 0.3% in December, Neil Dutta, Renaissance Macro head of U.S. economics, wrote in a report, cited by Bloomberg.
The economist notes that the report adjusts for seasonal retail sales from companies such as Gap, Bed Bath & Beyond, and Nordstrom. He tracked the annual change in search growth with the historical sales data during the same period.
“JPMorgan Chase & Co. also sees value in alternative economic data from Google Trends and other technologies,” Bloomberg wrote.
The Search and Trends data provides visibility into activity that traditional measures miss, per Bloomberg, citing JPMorgan’s report.
Some Wall Street analysts have been using Google search and Google Trends data for years.
Mark Mahaney, analyst at RBC Capital Markets, also refers to Google Trends data in his January 15, 2019 report when referring to Yelp. He wrote: "Comscore Traffic and Google Trends data look mixed-to-negative for Q4, tho Street FY19 estimates were materially reduced post Q3 ‘zero net adds’ issue."
Other analyst like Colin Sebastian, senior research analyst at RW Baird, use Google Trends data to identify interest in video games such as “Black Ops 4.” In a research note, Sebastian wrote “On a relative basis, Google Trends data still show "RDR2" generating significantly more search traffic than either "BO4" or "Battlefield.”