Michael Brandt on Nowcasting
Live Session Recording
In our June Fuqua Faculty Conversation, Michael Brandt, Kalman J. Cohen Professor of Finance, presented:
Nowcasting: How to go from occasional economic news to a real-time read on economic activity and sentiment
What does economics have to do with meteorology (besides the obvious, that both are notoriously bad at forecasting)? Surprisingly much. Both are quantitative sciences, they deal with highly complex dynamic systems, and they rely on large quantities of incomplete, delayed, and often heavily contaminated data. Much like the Doppler Radar system on the local news tells us the current weather conditions (a practice meteorologists call “nowcasting”), Professor Brandt and corroborators have developed a technique that gives us a clear picture of current economic conditions. They take the information contained in thousands of economic data releases each month, such as CPI or the unemployment report, and distill it into easy-to-interpret measures for the four key dimensions of economic activity: output, employment, inflation, and sentiment.