Market Overview

Why Google Trends, Golf Courses & Coffee Shops are Good Economic Indicators


Economists are known to use market indicators, extensive financial forecasts, and the previous work of other economists to support their judgement of an economy's prospects.

This economist will briefly assess the economy based on the popular Google (NASDAQ: GOOG) Trends website. For those not familiar, Google trends tracks the top searched items on Google, in addition to the world's interest in various topics.

Arguably, the most searched items by American users on a Saturday would be a great snapshot into how people are spending their weekends. Certainly, this tool is quite limited in judging an economy. It does, however, provide valuable insight into consumer sentiment, which is a pillar of any economy.

To be sure, the American economy has taken a hard hit in the past few years. In addition to the unacceptably high poverty rate, unemployment has soared, wealth has shrunken and confidence has withered.

Yet, Americans march on. People strive for new jobs, investment, and opportunities for happiness every day. Which is why a look into what people are searching for online is so powerful.

Looking at the top ranked searches this morning, several items pop out:

1. Golf courses. Golf is an expensive pastime, but it's number one in the rankings right now. Father's Day is likely a big component of the high searches, as fathers and sons ritually hack around the course together this weekend. But also consider how many golf courses around the nation will benefit over two days. Everybody from cart attendants to caddies will gain because of the increased traffic. While that amount of economic "boost" is impossible to measure, it's safe to say that it exists.

2. Coffee shops. Again, coffee at decent coffee shops isn't cheap. Anything more specialized than a basic coffee could set back a customer more than $4. Yet, this is the second-most popular search this morning, as Americans wake up to a beautiful day (in some parts) and want a nice cup of Joe. A couple of years ago, many Americans couldn't stretch that extra money every day and instead brewed their own coffee at home.

14. Car dealerships. Seeing that Americans are searching for car dealerships to go shopping is a very positive sign. Many potential customers don't have the chance to shop for cars during the week, so an uptick in searches on the weekend should be welcome news for dealers and manufacturers across the nation.

17. Travel agency. Using a travel agency indicates that consumers have discretionary income to spend on travel, which is good news for many people. This is also an indication that tourism is still a viable draw for the cities, businesses, and individuals that traditionally depend on it.

As a casual observer, these four searches build my confidence in the American economy's prospects. It may seem simpleminded, but these searches indicate an immediate motivation by consumers to spend money on the businesses that survive on it. This is capitalism at its finest, as consumers and businesses mutually benefit from the services or products provided.

Our financial system is by no means out of the woods. But that things almost seem normal is a positive sign for this amateur economist.

Posted-In: car dealerships coffee shops economics golf courses travelOptions Economics


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