Tuesday, December 2, 2008

Can Google Trends reveal when the recession actually started?



This will be my last post on the recession (at least for a while) that many countries already have entered as I will focus my energy on the opportunities that information technologies can create for individuals and businesses. But I find the "psychology of economics" to be very fascinating and just need to share this.

By definition, a recession is a significant decline in economic growth that lasts six months or longer (two successive quarters of falling GDP). But the thought of that we were heading into a recession must have started somewhere (I do not believe the financial crisis initiated the recession, it just accentuated it and made it worse than I would have needed to be).

A search for the word "recession" with Google Trends reveals that the "average worldwide traffic of recession" (the keyword) has been low since 2004 until it suddenly got a small revival in early 2007. After that, it did not take long unti the traffic began to increase and peak in January 2008, rise to a level above the usual and then peak again this fall. What conclusions would you draw?
 


2 comments:

  1. Hi Oscar, I wonder if this trend actually just shows when the fearmongering started - so reflecting an emotional response/ general feeling more than anything else? Elizabeth

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  2. Yes it does. But what actually causes ups and downs in the economy? What cause people to put their money on the bank instead of spending it? Emotions. Expectations. Feelings of uncertainty. My point is that when the fear mongering starts and begins to spread, the recession becomes a self fulfilling prophecy.

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