Google Domestic Trends Predicts Unemployment

According to a post by Google’s Chief Economist , Google Domestic Trends has been used to mimic variables such as initial claims of unemployment, among other things to predict short economic trends.  Given that one of the biggest leading indicators of economic activity is number of people who file for unemployment this could be modeled and predicted using Google Domestic Trends.

According to Research by Macro-economists Robert Gordon and James Hamilton, “…in each of the last six recessions, the recovery began within 8 weeks of the peak in new unemployment claims.”

Google applied the methodology outlined in the above research to predict initial unemployment claims using past values in a time-series then applied the Google Trends data to see how much it improved the forecast.  Mr. Varian and his team found over a 15% reduction in mean absolute error in predictions one week out.  Detailed information can be found in this PDF.

unemploymentThe point of the story is that initial claims have been declining from their peak and the Google Trend data predicts further declines.  This is one Google trend everyone hopes continues.

[tags]Unemployment Predictions, Google Trends, Economic News, Economic Predictions, Google Domestic Trends[/tags]

About Geoff Simon

Geoff is owner/operator of Simon Search Marketing. He graduated cum laude with a B.S. in Business Administration from California State Polytechnic University in 2003. Geoff immediately secured employment as an account coordinator with Grey Direct West, (now G2 Direct & Digital) working for Bank of Americas online banking division. From there Geoff has worked in a search marketing capacity for companies including Intermark Group, Disney Interactive Media Group, and Toyota Dealers Association. During his time Geoff has worked on brands including Disney Family, Toyota, Lexus, National Geographic, Red Bull USA Events, That '70s Show and Carsey Werner.
Geoff likes ice-hockey, is a Chicago native and proud dad to his almost 1-year old son Cyrus.
Find Geoff on Google+, Facebook, LinkedIn, or follow his Twitter handle @geoff_simon


  1. Unemployment Predictions with Google Domestic Search Woodland …: bad publicity bbc cnn ireport ComScore Geotar..

  2. Unemployment claims down 26,000 according to ETA Press Release this morning, good news for the economy, good news for these Google predictions.

  3. I wonder if this prediction model has been accurate since this post was written?

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