"Hey Google... How's The US Economy Doing?"

Authored by Nicholas Colas via DataTrekResearch.com,

How are Americans feeling about themselves, their economic prospects, and the stock market? Today we use Google Trends to answer those questions. The conclusion: they are pretty upbeat. Interest in equity investing is at one-year highs (for good or for bad), and “Bitcoin fever” seems to have broken. At least for now.

For most of human history, mankind did not know that fever was a symptom of illness. Instead, physicians tended to believe that the fever was the illness. Lack of reliable measurement tools complicated things as well; the modern clinical thermometer is only 150 years old. Once it came into common use, modern medicine could begin to link symptom with disease progression and treatment.

On a quarterly basis we use Google Trends as essentially a thermometer for a range of social and capital markets measurements. How are Americans feeling about themselves and their economic prospects? Are they interested in investing? Those are queries most often answered by polls and surveys, of course. But Google Trends lets us see what people are searching for online, in the privacy of their homes. And that can be much more telling than what they reveal to a random phone survey taker.

Question #1: What is the mood of the country?

  • Google searches for “Anxiety” and “Depression” are stable over the last 12 months. As for long-term trends, queries about “Anxiety” are up 3x since 2007 while searches related to “Depression” are about the same. Fair warning: American searches for “Depression” routinely peak in March of each year. And it isn’t even February yet…

  • Searches with the word “Angry” in them are down 22% year on year. The most riled-up states: Arizona, Maine, Illinois and Connecticut.

  • Search volumes for “Donald Trump” continue to wane from their post-inauguration highs, down 75% from a year ago. In terms of where these searches come from, the top 5 states that Google the President the most all voted against him: DC, Vermont, Massachusetts, Washington, and Oregon.

  • Google searches for popular antidepressants (Prozac, Xanax, etc) are all stable over the last 12 months.

Question #2: What is the economic mood of the country?

  • “Unemployment” searches on Google are actually higher than the same period last year by 7%.

  • Importantly, actual (as opposed to seasonally adjusted) unemployment in the US peaks every first quarter. The fourth quarter has the benefit of Holiday-related seasonal hiring, and Q2/Q3 get a boost from temporary tourism/hospitality related employment. We’ll be watching this one, though. It could just be that Holiday 2017 hiring was especially strong and so more seasonal workers are eligible for unemployment benefits in early 2018.

  • Searches for “Mortgage” are down 7% year over year, likely a function of higher interest rates.

  • Google queries for “Car loan” are flat to last year, a positive sign for automakers since many industry observers are calling for a decline in sales this year.

  • Searches for “Coupon” are at 5-year lows. We think of this as a “tell” about consumer attitudes to inflation. Simply put, there doesn’t seem to be much concern out there about rising prices.

  • Searches for “Ask for a raise”/”Get a raise” are stable over the past five years, but the latter query showed an uptick in Q4 2017. States where “Get a raise” are most popular: California, New York, Texas, Illinois, North Carolina and Florida. Still, we see no overwhelming pattern in the search data that points to widespread wage inflation pressures.

Question #3: What does Google Trends tell us about general interest in investing?

  • Search interest in “Bitcoin” is waning, down by 50% from the December highs. States with the most interest in the crypto: Hawaii, California, Washington, New York and New Jersey.

  • After a large runup of interest through December, searches for “Coinbase” (the popular online crypto wallet) are lower in volume than those for “Schwab” and close to those of “etrade”.

  • Interest in robo advisors like Betterment and Wealthfront are unchanged from a year ago. In fact, neither term has seen a big uptick in Google search traffic since 2015.

  • Google searches for “Stock market” were at one year highs just last week, up 33% from a year ago.

Our takeaway from all this: Americans are feeling pretty positive about their economic and personal lives right now. Some are getting up the courage to ask for a raise, but not many. They aren’t seeking out the very lowest prices when they shop. They have finally noticed the stock market’s rise, and want to learn more.

And the “bitcoin fever” of the last quarter may well have finally broken.

Sources: History of Fever: https://www.ncbi.nlm.nih.gov/pubmed/15236913