Constructing Consumer Sentiment Index for U.S. Using Google Searches
AbstractWe construct a consumer sentiment index for the U.S. using the popularity trends of selected Google searches. The final index consists of four components and is highly correlated with the Index of Consumer Sentiment from the University of Michigan and the Consumer Confidence Index from the Conference Board. Among the three sentiment indices, the Google search-based index (SBI) leads in time and predicts other indices. In terms of forecasting consumer spending, the SBI outperforms both the ICS and the CCI and provides independent information. For robustness, we use multiple measures of consumer spending and a range of statistical specifications. The finding is robust.
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Bibliographic InfoPaper provided by University of Alberta, Department of Economics in its series Working Papers with number 2009-26.
Length: 22 pages
Date of creation: 01 Oct 2009
Date of revision: 01 Feb 2010
consumer sentiment; consumer confidence; leading economic indicators;
Find related papers by JEL classification:
- C53 - Mathematical and Quantitative Methods - - Econometric Modeling - - - Forecasting and Prediction Models; Simulation Methods
- E21 - Macroeconomics and Monetary Economics - - Macroeconomics: Consumption, Saving, Production, Employment, and Investment - - - Consumption; Saving; Wealth
- E27 - Macroeconomics and Monetary Economics - - Macroeconomics: Consumption, Saving, Production, Employment, and Investment - - - Forecasting and Simulation: Models and Applications
This paper has been announced in the following NEP Reports:
- NEP-ALL-2009-11-07 (All new papers)
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