September 4, 2023
An overview of the economic sentiment indicator and its use of Natural Language Processing to provide insights into the U.S. economic cycle.
RavenPack's C-Level Economic Sentiment Indicator is a real-time economic sentiment indicator that utilizes Natural Language Processing (NLP) to consolidate corporate executives' perspectives from company transcripts into a single, actionable indicator. It offers insights into the U.S. economic business cycle, aiding strategic decision-making and enhancing economic forecasting.
An Economic Sentiment Indicator is a quantitative measure that gauges the overall sentiment or outlook of individuals, businesses, or experts regarding the economy's current and future conditions. It reflects collective perceptions and sentiments, providing insights into economic trends and potential regime shifts in business cycles.
The indicator is based on a multi-step process to distill corporate executives' views shared during transcripts into an economic sentiment indicator:
The indicator is updated on a daily basis, reflecting the latest insights from earnings releases and business updates. This frequent updating provides an up-to-date perspective on the U.S. economic business cycle.
The indicator aggregates corporate executives' views on the U.S. economy from quarterly transcripts, providing insight into the economic business cycle's current and future prospects. By consolidating these views into a singular indicator, the indicator enhances the detection of regime shifts in the U.S. economic business cycle. The indicator has demonstrated predictive ability over a 20-year test, accurately detecting shifts in U.S. Growth Domestic Product upshifts and downshifts. This accuracy enhances its value as an early indicator of economic cycles.
The indicator can aid economic analysis and decision-making mainly by providing:
The indicator benefits quantitative and discretionary investors by:
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The indicator's primary objective is to offer insights into the economic business cycles of the United States. Beyond its application in the U.S. economy, RavenPack has also adapted the methodology for Europe as well. This showcases the indicator's adaptability in gathering valuable insights from diverse markets and regions.
The indicator offers a unique perspective by consolidating executives' insights from earnings calls and business updates, providing a real-time and comprehensive assessment of the US economic business cycle. This innovative approach distinguishes the indicator from traditional macroeconomic indicators, which are often lagging.
As of now, the indicator is designed to focus on the U.S. economic business cycle, which is widely recognized as a reliable indicator for the state of the global economy. It extracts and aggregates information about the US economy from publicly listed companies' earnings calls and updates, providing valuable insights that can help inform assessments of not only the U.S. economic health but also the broader international economic landscape.
The indicator provides valuable insights into the current and future state of the US economic business cycle. This information can guide asset allocation decisions, sector rotation strategies, and overall investment positioning.
The indicator is delivered with comprehensive package of data, including:
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