(Almost) 200 Years of News-Based Economic Sentiment
57 Pages Posted: 29 Oct 2022 Last revised: 19 Dec 2023
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(Almost) 200 Years of News-Based Economic Sentiment
(Almost) 200 Years of News-Based Economic Sentiment
Date Written: October 28, 2022
Abstract
Using text from 200 million pages of 13,000 US local newspapers and machine learning
methods, we construct a 170-year-long measure of economic sentiment at the country
and state levels, that expands existing measures in both the time series (by more than a
century) and the cross-section. Our measure predicts GDP (both nationally and locally),
consumption, and employment growth, even after controlling for commonly-used predictors,
as well as monetary policy decisions. Our measure is distinct from the information
in expert forecasts and leads its consensus value. Interestingly, news coverage has become
increasingly negative across all states in the past half-century.
Keywords: Business cycle, macroeconomic news, economic sentiment, monetary policy, textual analysis, machine learning, big data, neural networks
JEL Classification: G1, G4, E2
Suggested Citation: Suggested Citation