Surveying Business Uncertainty

David Altig, Jose Maria Barrero, Nicholas Bloom, Steven Davis, Brent Meyer and Nicholas Parker

No 25956, NBER Working Papers from National Bureau of Economic Research, Inc

Abstract: We elicit subjective probability distributions from business executives about their own-firm outcomes at a one-year look-ahead horizon. In terms of question design, our key innovation is to let survey respondents freely select support points and probabilities in five-point distributions over future sales growth, employment, and investment. In terms of data collection, we develop and field a new monthly panel Survey of Business Uncertainty. The SBU began in 2014 and now covers about 1,750 firms drawn from all 50 states, every major nonfarm industry, and a range of firm sizes. We find three key results. First, firm-level growth expectations are highly predictive of realized growth rates. Second, subjective uncertainty is highly predictive of forecast errors and the magnitude of future forecast revisions. Third, subjective uncertainty rises with the firm’s absolute growth rate in the previous year and the extent of recent news about its growth prospects. We aggregate over firm-level forecast distributions to construct monthly indices of business expectations (first moment) and uncertainty (second moment) for the U.S. private sector.

JEL-codes: D20 E0 (search for similar items in EconPapers)
Date: 2019-06
New Economics Papers: this item is included in nep-bec and nep-mac
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Citations: View citations in EconPapers (25)

Published as David Altig & Jose Maria Barrero & Nicholas Bloom & Steven J. Davis & Brent Meyer & Nicholas Parker, 2020. "Surveying business uncertainty," Journal of Econometrics, .

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Journal Article: Surveying business uncertainty (2022)
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