04
Jan 12

Forecasting with the Internet?

Conclusion, via the New York Federal Reserve:

Economists are always looking for ways to improve their forecasts—to make their crystal ball a bit less cloudy. We find that Internet search counts possess useful information, not available in other variables, to now-cast or forecast the trajectory of some financial market data. While this predictive power is by no means universal—as we observe above, for a number of markets, Internet search data do not provide explanatory power beyond that of more traditional forecasting methods—the basic message is of a useful addition to the economist’s toolkit.