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?