Search Data to Predict

87 Tracking common search terms used on the Web can produce accurate, useful statistics about the unemployment rate. We hope to extend this approach to other economic statistics. T his study investigates the potential of using data about Web searches to predict an important macroeconomic statistic, specifically the number of unemployed workers in the U.S. Our underlying assumption is that people reveal useful information about their needs, wants, interests, and concerns via their Internet behavior, and that terms submitted to search engines reflect this information. Research indicates that the percentage of Web site visitors who are referred by search engines increased from 67% in 2001 to 88% in 2004 [4], so this data potentially offers a rich and timely source of information. The study finds that Web-based search data is associated with future unemployment data over the 77-week study period. This very preliminary result suggests search-term data might be useful in predicting other important macroeconomic statistics. A large proportion of job-related information gathering is conducted using the Internet [1, 10, 12]. Of the 54% of the U.S. population that uses the Internet, 16% engages in online job search activities [12]. There is evidence that unemployment duration has decreased among some Internet job seekers [9]. The Internet is credited with overcoming information bottlenecks in key areas of the labor market, affecting how worker-firm matches are made, how labor services are delivered, and how local markets shape demand [1]. Two kinds of Internet resources are available for job seekers—corporate job-posting sites and employment portals that serve as online employment agencies (such as Monster.com and Jobs.com). Access to either kind of employment resource requires job seekers first to locate its Web site, which is commonly done using search engines. We attempt to determine whether the frequency of search terms likely used by people seeking employment could enable analysts to anticipate the content of forthcoming federal monthly unemployment reports. We maintain that individuals and businesses can better manage their economic affairs when important information is available on a continuous rather than periodic basis. This assertion is subject to a few caveats. First, acquiring this continuous information must be cost effective. Second, the benefit to society increases as the continuous information is more widely distributed. Third, the continuous information should not be too noisy if it is to be useful.