New AI-Powered Index Promises to Provide Insight on the US Economy
Measuring the strength of the sprawling U.S. economy is no easy task, but one firm believes that its AI-powered index can do the job, and provide new insights into an ever-increasingly complex economic system.
According to CNBC, The Zeta Economic Index, launched on Monday, utilizes generative AI to analyze what its developers call “trillions of behavioral signals,”. These signals are largely focused on consumer activity, to score growth on both a broad level of health and a separate measure of stability.
According to the company, the index will gauge online and offline activity across eight categories, aiming to provide a comprehensive look incorporating standard economic data points such as unemployment and retail sales, combined with high-frequency information for the AI age.
David Steinberg, co-founder, chairman, and CEO of Zeta Global, explained the innovative approach: “The algorithm is looking at traditional economic indicators that you would normally look at. But then inside of our proprietary algorithm, we’re ingesting the behavioral data and transaction data of 240 million Americans, which nobody else has.”
Steinberg added, “So instead of looking at the data in the rearview mirror like everybody else, we’re trying to put it out in advance to give a 30-day advanced snapshot of where the economy is going.”
The eight verticals the economic index uses include automotive activity, dining and entertainment, financial services such as credit line expansion, health care, retail sales, technology, and travel. For the stability measure, the index aims to gauge consumers’ ability to handle gyrations in the economy.
Together, the goal is to provide something more expansive than GDP and similar measures to gauge growth. In June, both measures had good news, with the economic score at 66 and the stability index at 66.1. Respectively, the two readings correspond to “active” and “stable” regarding the health of the economy.
Steinberg highlighted the index’s holistic approach: “This is maybe a more holistic way of really predicting the economy because not only are you taking the existing economic indicators around GDP, employment, all the different reporting that comes down on different vertical sales, you’re layering on top of it. We’re really looking at what they’re actually spending. We’re looking at what they’re actually reading and researching.”
The Zeta Economic Index aims to offer a more precise forecast by leveraging detailed consumer behavior data. “We’re seeing all of that information, which allows us to build a better forecast,” Steinberg said.
By combining traditional economic indicators with real-time behavioral data, the Zeta Economic Index represents a significant advancement in economic measurement, promising to deliver insights that are both timely and deeply informative.
As the U.S. economy continues to evolve, tools like the Zeta Economic Index will be crucial in providing a clearer, more immediate understanding of economic dynamics, ultimately helping to inform better decision-making across various sectors.
Originally posted on OpenDataScience.com
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