Uncertainty Indices Mixed for First Quarter of 2018
08:30 ET
MCLEAN, Va., April 12, 2018 /PRNewswire/ -- Between the Lines Indicators, Inc. (BTLI) reports two indices that measure the level economic risk and uncertainty showed differing perspectives on the U.S. economy in the first quarter of 2018. BTLI has developed innovative methods of quantifying the level of uncertainty in the narrative that corporations and the Federal Reserve post in public documents and has created relevant indices to assess variations over time. The Federal Reserve Uncertainty Index (FED UI), which evaluates narrative posted by the Federal Reserve, decreased in the first quarter whereas the S&P 500 Corporate Uncertainty Index (S&P500 UI), which assesses corporate statements, rose slightly.
Specifically, the FED UI for the first quarter of 2018 decreased by 2.70% relative to the previous quarter. First quarter narrative from Federal Reserve statements noted solid growth prospects and a strengthening job market across a number of regions. Overall, statements indicated continued optimism and reduced uncertainty with regards to future business conditions. The Fed's outlook of decreasing uncertainty and risk in the economy are consistent with its plan of increasing interest rates in 2018.
The S&P500 UI moved slightly higher continuing a trend of three straight quarters of increased uncertainty in the narrative posted by S&P 500 companies. Though improving business conditions were noted in corporate statements and filings, this message was offset somewhat with the perceived risk regarding the federal government's trade policies and geopolitical instability among key trading partners. Moreover, the new tax plan signed into law has not resulted in the expected reductions in economic uncertainty as expressed by U.S. corporations. Though the overall corporate index is drifting higher, several sectors (notably Utilities and Telecommunications) bucked the trend by registering lower uncertainty index values.
Uncertainty is a broadly recognized influence on economic activity. The relationship between uncertainty and economic welfare has been well documented in economic literature and recent research has demonstrated a strong correlation between specific investment classes and higher levels of uncertainty. By employing advanced text analytic methods, BTLI has developed several uncertainty indices that are useful indicators of the changing conditions regarding economic risk and provide predictive capability in future market conditions.
Please visit the BTLI website at btl-indicators.com for more detailed information.
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SOURCE Between the Lines Indicators