Google data helps predict future course of economy

The Belfast Telegraph reports:

Researchers at the Bank of England have discovered that internet searches for specific related terms are a powerful predictive tool for seeing where unemployment and house prices will go in the future.

Taking search terms such as “estate agent”, “mortgage”, “unemployed” and “jobseekers allowance” and comparing their frequency over a period of years with actual subsequent movements in house values and the claimant count produced results that “have the potential to be useful for economic policy making” and in some cases beat existing guides such as surveys of public opinion.

The idea isn’t new – see Bill Tancer’s Click – and it reinforces what I was told when chatting to someone in a financial firm recently, namely that the dealers they know now often use Twitter to try to catch trends ahead of official information, e.g. a wave of farmers complaining about the weather’s impact on their crops.