Generative AI can be used to enhance economic forecasts through simple aggregation from corporate conference calls. We know that corporate CEO's provide economic outlooks on their earnings conference calls. It is part of the job, and it is critical that they get their forecasts right. The cost of being wrong high. Firm profits may suffer.
These conference calls provide a unique and special insight on the direction of the economy when all this information is aggregated. It is possible to aggregate all the verbal comments from transcripts using generative AI. All the information in conference call transcripts can be aggregated to form an index through highlighting key words and phrases like many other LLM models. An AI Economy Score can be employed to improve forecasts of GDP.
Researchers have found that there is positive incremental value from using the score from the conference call transcripts. See "Harnessing Generative AI for Economic Insights". This paper scratches the surface on using AI to help with macro forecasting, but it provides a good foundation of how new tools can support better global macro decisions.
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