Bank of England turns to Google to track consumer trends
Posted on June 11th, 2011
Internet search term data will become “an increasingly useful source of information about economic behaviour”, according to the Bank’s latest Quarterly Bulletin.
It said that, for example, data on searches for ‘flatscreen televisions’ and ‘fridges’ could help to analyse how demand for durable goods has changed over time.
“Internet search data have the potential to be useful for economic policy making. Monitoring current economic activity closely is an important aspect of policymaking, but official economic statistics are generally published with a lag,” said the Bank.
So far, internet search figures have been used by Bank economists to track the labour and housing markets, but it raised the possibility that the data could be used to help survey a far wider range of economic behaviour.
The central bank said the Google data on search volumes are freely available online and “the ability to track the popularity of such a wide range of search terms makes this the most suitable data source for this type of study”.
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However, it said that these techniques “could equally well be applied to data from other search engines if they were to make similar statistics available”.
In its latest survey, the Bank said unhappiness with its performance had risen since the middle of last year, a trend it put down to the public’s fears of higher inflation.
“Households with higher inflation perceptions tend to be more likely to report that they are dissatisfied with the Bank,” it said.
However, bank economists said that while inflation expectations in the short and medium term were mixed, “there is little evidence as yet that they are becoming entrenched in wage and price-setting behaviour.”
The Bulletin also offered new insight on the housing market and said that there were few signs that households were making an “active effort” to pay down mortgage debt.
The reversal in housing equity withdrawal flows from positive to negative since the start of the financial crisis had been taken as a sign that borrowers were repaying debt early. However, the Bank cast doubt on this assumption saying it may be more to do with a fall in property sales.
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