New research performed by the Bank of England has indicated that Internet searches performed using Google have helped accurately predict how unemployment and house prices will change in the future.
By monitoring search terms including “estate agent”, “mortgage”, “unemployed” and “jobseekers allowance” and collating the frequency of searches over a number of years, researchers are able to compare results to house values and unemployment figures at those times, producing results that in many cases beat surveys of public opinion.
Bank of England researchers Nick McLaren and Rachana Shanbhogue, said:
“Internet search data can help to predict changes in unemployment in the UK. These appear to be as useful as existing indicators. For house prices, the results are somewhat stronger: search term variables can outperform some existing indicators over the period since 2004. There is also evidence that these data could provide additional insight on a wider range of issues.”
By monitoring search results for terms such as “flat screen television” and other home appliances, researchers believe that they will be able to build a greater picture of the economy without having to wait for official figures to be released.
Using Google to monitor the economy is likely to aid the Bank of England as it seeks to win back the public’s confidence after it took over the Financial Services Authority and began regulating mortgages. The Bank’s most recent update noted that public satisfaction had declined since the middle of 2010.