Generative AI, Managerial Expectations, and Economic Activity

ArXiv ID: 2410.03897 “View on arXiv”

Authors: Unknown

Abstract

We use generative AI to extract managerial expectations about their economic outlook from 120,000+ corporate conference call transcripts. The resulting AI Economy Score predicts GDP growth, production, and employment up to 10 quarters ahead, beyond existing measures like survey forecasts. Moreover, industry and firm-level measures provide valuable information about sector-specific and individual firm activities. A composite measure that integrates managerial expectations about firm, industry, and macroeconomic conditions further significantly improves the forecasting power and predictive horizon of national and sectoral growth. Our findings show managerial expectations offer unique insights into economic activity, with implications for both macroeconomic and microeconomic decision-making.

Keywords: Generative AI, Natural Language Processing, Economic Forecasting, Macroeconomic Indicators, Conference Call Transcripts, Macroeconomics

Complexity vs Empirical Score

• Math Complexity: 4.0/10
• Empirical Rigor: 8.0/10
• Quadrant: Street Traders
• Why: The paper employs empirical econometrics like VAR models, but the math is not highly advanced or dense. Its rigor is very high due to the use of large-scale, real-world textual data (120,000+ transcripts) and multiple robustness checks across national, industry, and firm-level forecasting.

  flowchart TD
    A["Research Goal<br>Extract managerial expectations to forecast economic activity"] --> B["Data Source<br>120,000+ Corporate Conference Call Transcripts"]
    B --> C["Methodology<br>Generative AI / NLP Processing"]
    C --> D["Computational Process<br>Extract & Quantify Managerial Outlook"]
    D --> E["Core Output<br>AI Economy Score & Firm/Industry Measures"]
    E --> F{"Key Outcomes"}
    F --> G["Predict GDP, Production, Employment<br>Up to 10 quarters ahead"]
    F --> H["Composite Measure<br>Improves forecasting power & horizon"]
    F --> I["Implications<br>Unique insights for macro & micro decision-making"]