For economy forecasts, trust newspapers rather than surveys

 

Bankers rarely are a source for news most people can rely on. Except other bankers, perhaps, who walk with their backs against the wall.

Yet there is this little nugget of news today to uplift the spirits of newsmen. Researchers at the Federal Bank of San Francisco found out that newspapers are more accurate predictors of performance of the economy.

“Specifically, we have shown that sentiment extracted from newspaper articles correlates with both contemporaneous and future key business cycle indicators,” economists Adam Hale Shapiro and Daniel Wilson of the San Francisco Fed found in a report they wrote jointly with Moritz Sudhof, of data analytics firm Kanjoya. “In a head-to-head comparison, these news sentiment measures perform better than both the University of Michigan and Conference board measures of consumer sentiment.”

Perhaps journalists have that “je ne sais quoi” that machines still miss. But for sure, robots know everything else.

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