Google trends has now launched a new service called Google trends economic indicators. There are 23 different trends that are constantly tracked. You can add other statistics such as the Dow industrial averages to the trend line. I tried that with their business trend indicator and here is what shows up. Business trends. When you add the Dow graph to it the graph takes on much more meaning. We can easily see that as the Dow goes down business goes up and vice versa. Now that is really interesting. Of course, as most of us know, the Dow is and has been in a steady decline for a considerable time now and the business level indicator is steadily increasing which seems to indicate an improving economy. If we look at credit and lending and add in the DOW we see a much stranger pattern. It appears that normally those two follow each other reasonably closely but ever since July of 2007 they have reacted very differently, each apparently choosing it's own paths. It just so happens that July of 2007 was when the current recession started to be felt by most. About September of 2008 the situation started to reverse itself and as the Dow went down the index of credit and lending has gone up little by little and the gap seems to be widening. It seems that they are headed towards another convergence and crossing of the paths and if that actually happens the current recession could easily deepen drastically. All of this may seem like some kind of dull dry lesson in economic analysis but in truth Google has provided us with valuable tools for us to use on a constant basis in our personal financial planning. Can we realistically afford that new car or home or even luxury goods if we can so easily see that a downturn in the economy is just around the corner? What about the unemployment rate? We see that the Dow and the unemployment rate are normally pretty much in line with each other but now the disparity is very great. Watching these important indicators can tell us a great deal about how to plan for the future and hopefully prevent our making serious mistakes in our planning.
One of my biggest concerns regarding how unemployment is calculated - they are missing the people who no longer receive unemployment benefits, but still do not have a job. These important numbers are not calculated into the rate. I love the Google tools, but I will continue to save as much income as possible. I continue to work on spending frugally within my disposable income.
