Simple Search Terms Can Predict A Recession

Google Trends is a public web tool that enables users to study hidden relationships based on a selected subset of massive search data collected from Google Search. A breakout search term from Google’s user groups may indicate significant business trends that can be exploited to gain a better understanding of consumer behaviors, for marketing purposes, or  for obtaining a more thorough understanding of a macroeconomic environment.

Methods

In this study, I attempted to find simple search terms from query data that correlated well with a recession pattern in the U.S economy. I entered “foreclosure,” “recession,” “layoffs,” and “bankruptcy” as search terms, using data from 2004 to 2013 and limited to within the U.S. I assumed that when many people had an interest in searching for those four ominous terms, that those people felt pessimistic about the state of the economy. They would consequently curb their spending, leading to further deterioration of the economy. Let’s see if that thesis coincides with the reality that the worst U.S. recession since World War II started in January of 2008 and lasted through March of 2009, as agreed upon by most respected economists.

Results

The graph illustrates Google users’ search interest from 2004 to the present for the four keyword searches mentioned above. The highest search volume of data was denoted as 100 on the Y-axis, with all other data normalized to that scale.


For the green “bankruptcy” curve, I ignored the data pre-2006 because Congress had passed the new bankruptcy law in 2005, which caused an abnormal jump in search interest for “bankruptcy”. As seen in the graph above, when search volume increased (as indicated by an arrow), the change in the trend of that search interest preceded the likely onset of an economic recession. Clearly, the breakout in searches for “foreclosure” was a glaring warning, because the numbers forecasted the onset of a recession in March of 2007 (as indicated by the graph’s blue arrow), nine months ahead of the actual occurrence of the event. The term “recession” signaled the strong likelihood of a downswing in economic conditions in September of 2007 (as indicated by the blue arrow, three months ahead of the recession), while “layoff” (as indicated by a yellow arrow in March of 2008) and “bankruptcy” (as indicated by a green arrow) signaled additionally strong indications of a recession in approximately April of 2008.

 

By analyzing the data trends, I have been better able to understand how the recession occurred. First, people on subprime mortgages were unable to pay their mortgages and lost their homes to foreclosure, leading to the disruption of business. Anxious users began to hysterically search Google for information about a “recession,” while companies reacted to bad business by reducing headcount and laying off large numbers of employees. The unemployed filed for bankruptcy with their houses foreclosed, thus repeating the cycle.

Based on this study, the Federal Reserve Bank should have acted hastily to lower interest rates in March of 2007. Instead, it hesitated until August of 2007 to announce the first rate cut. By then, the damage to the economy had already been sustained, which was struck with a deep recession and total job losses exceeding 9 million between 2008 and 2009.

From this study, it can be seen that a clever algorithm can turn seemingly worthless, raw search data into a tool for obtaining valuable insight or treasured applications. In this case, one of the worst recessions sustained by the world’s highest ranked economy can be interpreted and deciphered by the behavior of Internet search users.

Which iPhone 5s Color Model Is the Hottest?

Which is the most in-demand iPhone 5s model?

Search Interest for iPhone 5s gold, silver, and black

Although few people had actually seen the iPhone 5s, the interest in Apple’s newest phone was steadily increasing on Google’s web search. In typical Apple fashion, the company had kept a tight lid on their newest product lines. As seen in the graph above, roughly one month prior to Tim Cook’s presentation of Apple’s newest iPhone on September 10, 2013, more queries has been entered into Google for the iPhone 5s gold model as opposed to the iPhone 5s silver or iPhone 5s black models.

Indeed, Google Trends correctly predicted the 5s gold as the most in-demand iPhone 5s model long before the public was able to get a first glimpse of Apple’s new iPhone models.

December is the Best Month to Take the SAT Prep Class

SAT exams are offered seven times per year, specifically within the months of January, March, May, June, October, November, and December. A search term for “SAT” from 2009 through 2013 indicates that the public showed the least volume of interest in the SAT exam in February, whereas “SAT” garnered the most attention in October of each year. That would seem right, given the deadline for regular admissions for colleges is approximately January 1 of each year, when most high school seniors have already completed the SAT exams.

Search interest for SAT peaks in October every year for the last 5 years

So, when is the best time for a student to take an SAT prep class? If a student’s family is living within a relatively tight budget, a high school student should plan on taking the preparatory class when interest in registration for the SAT is waning, because the classroom size will be smaller, individualized attention provided by prep class administrators to the student will be more readily available, and the SAT prep companies providing the classes may offer a discount to students as well.

According to the graph below, the ideal time for a student to register for an SAT prep class is in December of each year, when the search interest is at its lowest point. Most seniors have already taken the SAT test at that time to meet the regular decision deadline on January 1. Additionally, there are several holidays in December, and not as many students will have a strong desire to study at that time of the year.

Search Interest for SAT Prep hits its lowest point in December of each year for the last 5 years.

Using Google Trends to Evaluate Freeware

Freeware that is available for download from the Internet presents a potential risk to users because it may be accompanied by malware. When a user installs freeware, he or she must typically agree to accept an “end-user license agreement” (EULA), which gives the software vendor the right to install third-party malware along with the freeware.

For a student like myself with limited financial resources, I sometimes do not have much of a choice regarding the potential purchasing of expensive software. Recently, I had a need for screen-capturing software and was overwhelmed by the vast array of free options for such software via the Internet. How could I most accurately determine which option offered the best tool to meet my needs while providing me with the peace of mind of being spam and virus-free? I could not place my trust in any third-party review websites, since not only could the information these sites provide be outdated, but they could also merely be interested in promoting their own freeware packed with troubled spyware.

Below is a list of the top five available freeware options with screen-capturing capability from the websites top5freeware.com and about.com:

1) Screen Hunter (trending down)

2) Gadwin Printscreen (flat)

3) Techsmith Jing

4) MW Snap

5) Greenshot

I used Google Trends to analyze the freeware listed above. I entered the names of the programs as search terms limited to the United States and from 2004 until the present: “Screen Hunter,” “Gadwin Printscreen,” “Techsmith Jing,” “MW Snap,” and “Greenshot”.

Evaluating Screen Capture Software

As seen in the graph above, the rankings from top5freeware.com are reliable, with Screen Hunter and Gadwin garnering the top volume of searches. Interest in Greenshot was nonexistent before 2009 but has since picked up in a steep uptrend. Currently, it remains the top freeware upon which people are conducting their searches.

Ultimately, I chose to download Greenshot to my computer, and I am very happy with this choice.