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What Google Searches Are Telling Us About Consumer Sentiment

What Google Searches Are Telling Us About Consumer Sentiment

Sentiment is strong.

Household spending should remain strong through the first half (1H) of 2017, thanks to positive feelings about job security and household finances, based on Google Searches.

But people are still worried about the economy.

The Trump Effect

The University of Michigan’s Consumer Sentiment and the Conference Board’s Consumer Confidence Indices all point to a sharp positive jump following Trump’s election.

But there is no equivalent shift showing up in the Google searches.

Instead, it’s more steady-as-you go.

That’s actually better: if the Indices were correct, then consumer sentiment (and spending) rests on Trump’s ability to deliver.

Instead, if consumers are ignoring the Trump factor, then spending will continue regardless of Trump’s success or failure.

Conversely, if the Consumer Sentiment and Consumer Confidence Indices are correct that Trump has unleashed a burst of consumer spending, then any failure by Trump will lead to a consumer spending pullback.

I believe that the Trump factor is wildly overstated and that consumer spending is more rooted in the basic American consumer habits: spend 100% of what you earn.  And earnings continue to rise, so spending does as well.  

When it comes to positive economic sentiment and Trump’s presidency, it’s easy to mistake coincidence with causation. It’s like a football season that starts with easy games but as the season progresses, we get to see the real performance.  Similarly, Trump is benefitting from events unrelated to him.

That is, the stock market rally was unleashed once interest rates and oil prices moved up.  Business spending was bound to come back once the election was over and companies had to restock.  Third, the minimum wage hike in January boosted incomes and spending.

But as these waves recede (oil rally is done, for example), sentiment could turn down.


Job security is high but it may have peaked..

On the one hand, searches for Salary Raise are at an all-time high.

Unemployment searches are at cyclical lows. On the other hand, both signals have remained flat for almost a year with no signs of improvement.

Meanwhile, the more important signal is the steadily falling interest in Changing Jobs.

For most workers, changing jobs is the most important means of boosting wages. Interest in changing jobs remains high but it’s on a down-slope. That may be pointing to rising concern that jobs aren’t out there.

Consumer spending should remain strong. In addition to the generally strong JobSecurity sentiment, sentiment around household finances looks strong.


All signs point to strong consumer financial sentiment.

Bankruptcy searches are at all-time lows.  And people feel like they have some wealth and assets, based on the interest in investing and in gold.


What makes this especially encouraging is that people are not blind to underlying shifts in the economic fabric.

Instead, the rising searches for “Interest rates”, “Inflation” and “Recession” serve to indicate that people are fully aware that the economy has headwinds.  Perhaps that will prevent a return to the mad excesses that preceded the previous recession.

KEY TAKEAWAY: So far, the coast looks clear simply according to Google searches. Searches for unemployment are low. Salary raises are high. And changing jobs is trending down.

But that doesn’t mean we’re out of the woods just yet. Google searches show people are worried about the state of the economy – as indicated by the upward trend in searches for “recession”



Andrew Zatlin

Editor of Moneyball Economics

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