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Constructing Consumer Sentiment Index for U.S. Using Google Searches

Author

Listed:
  • Della Penna, Nicolas

    () (Unknown)

  • Huang, Haifang

    () (University of Alberta, Department of Economics)

Abstract

We 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.

Suggested Citation

  • Della Penna, Nicolas & Huang, Haifang, 2009. "Constructing Consumer Sentiment Index for U.S. Using Google Searches," Working Papers 2009-26, University of Alberta, Department of Economics, revised 01 Feb 2010.
  • Handle: RePEc:ris:albaec:2009_026
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    File URL: https://sites.ualberta.ca/~econwps/2009/wp2009-26.pdf
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    Cited by:

    1. Yan Carrière‐Swallow & Felipe Labbé, 2013. "Nowcasting with Google Trends in an Emerging Market," Journal of Forecasting, John Wiley & Sons, Ltd., vol. 32(4), pages 289-298, July.
    2. Alessia Naccarato & Andrea Pierini & Stefano Falorsi, 2015. "Using Google Trend Data To Predict The Italian Unemployment Rate," Departmental Working Papers of Economics - University 'Roma Tre' 0203, Department of Economics - University Roma Tre.
    3. Briggs, Justin Thomas & Tabarrok, Alexander, 2014. "Firearms and suicides in US states," International Review of Law and Economics, Elsevier, vol. 37(C), pages 180-188.
    4. repec:eee:jeborg:v:145:y:2018:i:c:p:1-23 is not listed on IDEAS
    5. Florian Schaffner, 2015. "Predicting US bank failures with internet search volume data," ECON - Working Papers 214, Department of Economics - University of Zurich.

    More about this item

    Keywords

    consumer sentiment; consumer confidence; leading economic indicators;

    JEL classification:

    • C53 - Mathematical and Quantitative Methods - - Econometric Modeling - - - Forecasting and Prediction Models; Simulation Methods
    • E21 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Consumption; Saving; Wealth
    • E27 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Forecasting and Simulation: Models and Applications

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