How is the Swiss economy doing today?
The first half of 2020 can already be regarded as historic. Seldom before have economies shrunk so fast in such a short time. As a result of Covid-19 and the related government measures, unemployment figures rose rapidly almost everywhere. Economic output measured by gross domestic product (GDP) fell more sharply than we had seen in decades. Yet there was still vast uncertainty about how dramatic the slump would be and how quickly economies would recover.
In Switzerland, annual GDP was expected to fall by around six percent (Seco, April 2020). This would not affect all sectors equally. Restaurants and airports are hit much harder than supermarkets or the pharmaceutical industry. While the extremes are obvious, many questions remain open.
How quickly, for example, will demand for durable goods rise again? In recessions, consumers save money and cut spending especially on clothing, furniture or cars. That spending is easier to postpone, which makes those sectors very pro-cyclical: in a recession they suffer particularly, and with them the advertising industry and, in turn, newspapers, which sell fewer ads. Demand for clothing or cars therefore matters for many other industries through second- and third-round effects.
This high uncertainty is a problem for politicians and companies alike. How much government support is needed, and where? When will companies again face rising demand and turnover?
Data can help answer such questions, but often they first have to be prepared and visualised. That is exactly what trendEcon does. Every day, Swiss people search Google for countless keywords. Via Google Trends, anyone can see which terms are currently searched most. The terms WC Papier (toilet paper) and Rezession (recession) are illustrative:
From the second week of March onwards, searches for recession clearly rose. We also see the large number of people searching for toilet paper in mid-March, during a short-term shortage. The toilet-paper worry quickly faded, but the recession topic stayed present.
Such examples are illustrative, but they also highlight the problems: which search terms are actually relevant, and how can several be combined? How can the data be presented cleanly and comparably? What are useful benchmarks? trendEcon addresses this by selecting suitable search terms from many candidates and preparing the data from January 2006 onwards, including seasonal adjustment and the treatment of public holidays.
Our main indicator, Perceived Economic Situation, is based on the keywords economic crisis, short-time work, unemployed and insolvency. The more often these terms are searched, the worse the assessment of the current situation. The slump from late February and the low point shortly after the Federal Council's decisions of 16 March 2020 are clearly visible:
Sentiment had already brightened considerably by late May, although the indicator was still below its long-term level. A year-on-year comparison with 2019 shows the striking difference: