Google Predicts The Economy

It has been said that if you put a million monkeys in front of a million computers, you would eventually produce an accurate economic forecast. Let's see how well that theory works ...

That's from this post at the Google Research Blog linking to a paper where researchers used Google Trends to analyze and predict current economic metrics like retail sales, auto sales, travel behavior and home sales. They found that monitoring search activity actually does have some predictive value for those metrics, and are encouraging aspiring econometricians out there to go digging for interesting correlations themselves.

It's the latest great example of how free information will drastically alter the way we monitor economic activity. The possibilities (and complexities) are staggering. For example, a few years from now will we be keeping track of searches for "Whirlpool" and "dryer" as we attempt to divine durable goods orders? Will searches for "unemployment insurance Michigan" be used to predict both the jobless rate and auto sales activity? Will investors be able to track searches for hotels in Las Vegas to predict how shares of WYNN will do over the next quarter?

Get to work monkeys!