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Quantifying Zeitgeist: news-based economic indicators in China & Japan

A narrative dominates the media and news that we in the midst of a turbulent and unpredictable epoch. In other words, we are living through ‘uncertain times.’ Many people, academics, alt data providers, and investors alike, are asking themselves whether such text-based narratives can be distilled into a quantitative signal. In the following intelligence piece, we demonstrate how economic indicators derived from unstructured news data have been variously used to assess Chinese labour market conditions and forecast Japanese inflation.

In the past few days, I have been the target of several advertisements bouncing off the theme of uncertainty – “Be certain of your credit score in uncertain times” and so on and so forth. Aside from showing that programmatic advertisers have a dispiriting view of my personal finance situation, these ads function to remind the reader of an all-pervasive societal malaise, exacerbated by factors including Brexit, trade wars, and an increasingly dim view of our planet’s climatological future.

A reasonably large amount of academic research has concerned itself with the concept of economic uncertainty. There is even a website dedicated to it. However, whereas these indicators focus on good/bad ‘big picture’ dichotomies, it is now possible to look more closely at individual pieces of the puzzle.

Let us set aside any concerns regarding fake news, negativity bias, and sensationalism and consider a few instances where macroeconomic news analytics have proven to be, well, newsworthy.

USING MEDIA TO ASSESS LABOUR MARKET CONDITIONS

It makes sense to start with China.

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