Real-Time Google App Measures Economic Health
Want to know if we're still in a recession? Just ask Google. The search giant has created a new app that compiles a real-time consumer price index (CPI) using the cost of online goods. Unlike the CPI published every month by the US Bureau of Labor Statics, the Google Price Index will measure how inflation and unemployment change by the minute.
The Google Price Index was created by Hal Varian, the chief economist for Google, the Financial Times reported. Varian does not believe that the Google Price Index can totally replace the CPI just yet, but the app has accurately predicted Bureau of Labor Statics findings so far.
The CPI maintains a slight edge on the Google Price index because the items sold online vary from the items sold in the real world. For instance, housing sales make up 40 percent of the regular CPI, but only 18 percent of the Google Price Index.
However, Google has access to data that the Bureau of Labor Statics doesn't: search queries. By factoring how often people search for topics relating to unemployment, the Google measure the unemployment rate in real time.
The Google Price index remains a work in progress. Although, considering Google kept Gmail in beta status for five years while letting the public use it, "work in progress" implies a lot of functionality to the folks in Mountain View.
