Introduction

The economy has been big news during the pandemic. In recent months, we’ve had skyrocketing CPI prints, massive supply disruptions, shipping bottlenecks, warnings about consumer sentiment (consumer spending is 70% of US GDP), and many eyes glued on economic indicators. While some indicators (e.g. CPI) are published monthly, others are only available after the end of the quarter (e.g. retail sales) and sometimes with a sizeable delay.

Can we aggregate multiple sources of data to estimate how something like retail sales might be trending, months before the official numbers are released?

Here, I experiment with the use of US Google Trends data and some economic readouts to extrapolate the current health of the retail sector. I will be using from Google Trends data on e-commerce retailers, specifically, because there isn’t a good proxy for trips to brick-and-mortar stores. The biggest general purpose e-commerce retailers are Amazon, Walmart, and eBay, so I think it’s sufficient to focus on those three.

Market share of leading retail e-commerce companies in the United States as of October 2021

Statista 2021. https://www.statista.com/statistics/274255/market-share-of-the-leading-retailers-in-us-e-commerce/

As to the question of “why not just directly look at the economic indicator for retail sales?”, the RETAILSMNSA indicator for September 2021 was only just released. It’s currently November 21st. While the US Census Bureau is undoubtedly the final authority, we might actually be curious about the current state of affairs.

I will use “hits” to refer to the scaled numbers out of Google Trends, since that’s what they call them. And for brevity and entertainment’s sake, any reference to combined numbers across the three retailers Amazon, Walmart, and eBay will be referred to as “AWE”.

There is a laundry list of limitations and assumptions to this analysis, which you can see at the end. Also, note that the more manipulations we do on data, the harder it is to interpret. We will be entering that territory.

E-commerce retail sales

Non-seasonally adjusted e-commerce retail sales (in millions of $) are reported quarterly by the US Census Bureau as ECOMNSA. Here is what the past 11 years of data look like. There’s quite a stable trend and seasonal effect up until 2020.

E-commerce percent

E-commerce retail sales as a percentage of total sales are also reported quarterly by the US Census Bureau as ECOMPCTNSA. There’s also a stable trend and seasonal effect (more e-commerce in Q4), up until 2020.