Google Search for Recession

Apr 7, 2008: 9:24 AM CST

Google searches for the term “recession” are on the rise, but have decreased after peaking in early 2008. How might this be of benefit to the average investor?

Bill Tancer of Time Magazine recently wrote an article entitled “Googling the Recession” which compared a few terms related to “recession” that were interesting.

Tancer noted that most searchers likely were not aware of the common definition of a recession, which is officially defined as ‘two consecutive quarters of decline in gross domestic product,’ and noted that investors broadened their search beyond ‘recession’ and also searched frequently for “surviving a recession” and the like.

Tancer also notes a potential caveat to consider: “[If] the bulk of Internet searches during that period focused on what a recession is, one might assume that the spike in these kinds of searches was driven by media coverage of the topic. Searches focused on “recession” may not be the best indicator of an economy in trouble. If we compare searches that contain the term “cheap,” “discount” and “budget” during the same time period we might have a better understanding of consumer’s economic sentiment.”

Furthermore, “The real indicator might lie in aspirational searches, or those queries for things beyond most consumers reach. Searches for “Ferrari” are down 40% from the same week last year.”

I used Google Trends to see what the results were for the term “recession” and the results were revealing. I have attached the chart:

We see the most results (unfortunately, I was unable to find actual volume statistics) near January 22nd, when the global markets plunged and the Fed jumped in to rescue the markets with a .75 rate cut. The news headline at “B” was “Stocks Dive on Fears of US Recession.” The headline at “A” was “Fed cuts rates to fend off Recession”.

The bottom line represents the news references (news articles) addressing the topic “recession,” which also spiked then but have been in decline.

I recommend playing around with this tool from Google and seeing what insights you might discover.

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