Uncertainty Indices Mixed for Fourth Quarter of 2017

Uncertainty Indices Mixed for Fourth Quarter of 2017

MCLEAN, Va., Jan. 15, 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 fourth quarter of 2017.  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 fourth quarter while the S&P 500 Corporate Uncertainty Index (S&P500 UI), which assesses corporate statements, rose slightly. 

Specifically, the FED UI for the 4th Quarter decreased by 3.48% relative to the previous quarter.  Fourth quarter narrative from Federal Reserve statements noted solid growth prospects and a strengthening job market across a number of regions.  Overall, statements indicated growing optimism and reduced uncertainty with regards to future business conditions.  Decreasing uncertainty and risk in the economy may signal intent on a part of the Fed to continue with the plan of increasing interest rates in 2018. 

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The S&P500 UI moved slightly higher reflecting a second straight quarter of increased uncertainty in the narrative posted by S&P 500 companies.  Though improving business conditions were noted in corporate statements and filings, there was significant uncertainty with regards to the adoption of the federal government’s tax plan and specifically how that would impact individual sectors if enacted.  Now that the tax plan has been signed into law, one would expect lower uncertainty indices going forward in 2018 (all other factors being equal).

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.

Media contact:
Ted Stump
[email protected] 

SOURCE Between the Lines Indicators, Inc.