Expectations and Business-Cycle Dynamics

Menzie Chinn tracks mentions of "recession" on Technorati. Can we use this as a reliable variable measuring some aspect of market expectations?

Comments

[The Constructivist]

Uh, a Greenspan bounce? Blippy, so far.

[Robert Waldmann]

Clearly the series has to be detrended in some tricky way, since the gross inflation of cyberchatter creates an irregular trend. One could simply divide by "blogs searched" or whatever. I would normalise by looking at the ratio of mentions of "recession" and of "expansion" or "recession" and "boom".

[Cormac Bracken]

Technorati's built-in grapher doesn't allow that level of sophistication. But here's the simple case for "expansion":

http://technorati.com/chart/expansion?chartdays=360&language=en&authority=a1

Looks like the only clear conclusion is that people are suddenly talking about the economy a lot in the last week or so. Which is no more than we'd expect following the recent Chinese-triggered slump.

Or let's try posts on blogs about "Economy" with "a lot of" authority (presumably based on being linked to), for "growth" vs "recession":

Growth:
http://technorati.com/chart/growth?chartdays=360&language=en&authority=a7&blogtag=economy

Recession:
http://technorati.com/chart/recession?chartdays=360&language=en&authority=a7&blogtag=economy

Seems like growth wins after all.

[Cormac Bracken]

...although the graphs that really shock me are the ones showing that climate change is more talked about than Britney Spears.