Analyzing how the economy is evolving under the measures taken to fight the Coronavirus is extremely important - but at the same time utterly difficult. In normal times, consumer sentiment data, which is used to make short-term economic forecasts, is published every quarter. For decision makers this is too long a wait during these extraordinary time as economic conditions are changing at an unprecedented pace.
In group TRENDECON has explored a new way to measure consumer sentiment. It delivers real-time information and is easy to compile. The idea is to look at the words people in Switzerland search frequently on Google. We use Google Trends data for keywords such as “Wirtschaftskrise” and “Insolvenz” to construct a new index of consumer sentiment. We retrieve Google Trends search data through the Google API and compare the data to existing economic indicators.
We faced different challenges regarding the sampling and aggregation of the data. We had to find the indicators that best serve our purpose and deal with seasonal adjustment and related econometric issues. This index provides more timely information about consumer confidence. It will be available online and we are convinced this will be an important, easy to use source of information for economic decision makers, the media, and the broad public during the upcoming months until the end of the current crisis. This tool will be particularly helpful for policymakers and business leaders during times of uncertainty.