The Trend is Your Friend

Now that summer is shifting into gear it’s great to see so many people out and about again. Signs of improving activity abound. The TSA recently reported crossing the 2 million mark for daily airport travelers. By this measure, air travel is back to around 82% of pre-pandemic levels, way up from about 4% of normal amid the broad shutdowns of April last year.

Also, as my son reminds me, our beloved Giants seem to be filling their stadium once again, and they currently have the best record in baseball. What a difference a year makes!

All this is happy news for the economy (even for a sports stadium – I’m sure they sell more concessions when the home team is winning), but what does it tell us about the direction of markets?

As with just about everyone and everything, the pandemic also interrupted how economists and market watchers do their jobs. Things changed so much so quickly, and the newness of shuttering the brick-and-mortar economy coupled with opening in fits and starts wreaked havoc on the collection of meaningful economic data. Consumers changed a lifetime of patterns overnight, so how can you predict what they’ll do next? People on “Wall Street” are paid lots of money to answer questions like that, and they live and die by the quality of their data. I imagine it as something like trying to read the tea leaves in a hurricane.

It’s been interesting to see the new kinds of data these folks are using to generate their analyses. Anonymized cell phone location data is popular in some circles. We saw this used last year when journalists (and others) were monitoring whether people in an area were abiding by stay-at-home orders. A little creepy perhaps, but useful if you want to monitor where people are actually going. Now some in finance use similar data to gauge traffic passing through truck stops across the country to get an idea of how the economy is picking up.

Another of these nontraditional data sources has been Google Search Trends. Anyone can leverage the company’s massive database to see what people are searching for and how these searches ebb and flow over time. Are people searching for boats more than RVs, or used cars more than new, or maybe restaurants but takeout is still popular? This is valuable information to analysts charged with figuring out how different industries are doing, even as consumer buying habits evolve.

My research partners at Bespoke Investment Group periodically turn to these search trends and I’m including some of their recent notes and charts below. It’s a good look at what folks were searching for mid-pandemic and what they’re looking for now.

And I’m including a link to the Google Search Trends page so you can play around with the tool if you like.

Also, a little ahead of time, but Happy Independence Day! I hope you enjoy it with family and friends.

Continue reading…

One pandemic theme was a surge in interest in outdoor-focused activities.  People have more alternatives for things to do today than they did a year ago during the worst of the lockdowns, but overall, many of these hobbies and outdoor activities that picked up in popularity over the past year are here to stay. In the charts below, we show the Google Trends indices for a range of these topics. 

At the peak of the lockdowns, interest in things like boating, hiking, camping, fishing, and biking all surged.  One year later, though, the readings are mostly in line with June readings of years prior to 2020, though, there are some exceptions.  Interest in things like "Boats for Sale" and "RV" both remain elevated.  Those readings are well below last year's highs from around this time of year, but the current readings are also well above any other year going back to 2004 when Google Trends data begins.

Of these topics, one notable standout has been searches for "Golf".  Last year, the Google Trends index for the sport did not necessarily see any significant breakout, although searches for related terms like "driving range" and "golf clubs" did. Nonetheless, the sport has seen an increase in interest over the past year. Whereas other terms highlighted below are below last year's levels, golf is actually hitting the strongest level of search interest since 2012. 

The early summer is usually when searches for "vacation", "flights", "hotel", and "Airbnb" all peak seasonally.  The pandemic saw search interest get crushed for each of these except for Airbnb (ABNB), which likely benefited from the fact that rentals could potentially see less traffic than a hotel for those who wanted a getaway.  Fast forward to this year, searches for Airbnb remain strong. Meanwhile, searches for "Hotel" hit a multiyear high a couple of months ago at what was a seasonally unusual time of year. Even after pulling back, search interest for the term hotel is at the highest level for June in a decade. Interest in flights is also flying albeit there is still plenty of room for further improvement.

Some other areas in which search interest is far less recovered include cruises and live events.  As shown below, interest for terms like "Cruise", "Concert", "Movie Theater", and "Tickets" are all still outside of their historical ranges but have made near-vertical moves over the past few months.

Dinner and a movie may not have the same date night prevalence as it did prior to the pandemic, but nights out on the town are certainly back.  Searches for "Restaurant", "Bar", and "Reservation" all are at or just off record levels as people go back out to eat.  That is not to say take-out has not remained a popular option for dinner though.  Searches for the term have clearly peaked but remain well above any pre-2020 readings.

Similarly, restaurant and bar shutdowns meant people had to cook for themselves last year which resulted in searches for things like "Recipe" and "Cookware" to both hit records.  As is seasonally normal, interest for these two terms has come back down to Earth, but the current trends are again above prior years' levels.  In other words, people are itching to get back to restaurant tables, but they are not completely abandoning meals from home whether those are or are not cooked by themselves.

https://trends.google.com/trends/?geo=US

Here’s a link to Bespoke’s site if you want to read up on them. I’ve been an institutional subscriber for years.

https://www.bespokepremium.com/

Have questions? Ask me. I can help.