The Covid-19 pandemic presents a unique problem to economic forecasters — one that’s uniquely urgent to solve. As consumers’ needs, attitudes, and behaviors continue to rapidly change, how can forecasts accurately adapt to reflect them? The key is to build consumer sentiment into economic forecasting models. To do this, economists must marry credit- and debit-transaction data with ongoing qualitative data on consumer sentiment. This article presents an effective example of a model like this, which accurately predicted the spending habits of consumers in hard-hit sectors between April and June of 2020.
In these difficult times, we’ve made a number of our coronavirus articles free for all readers. To get all of HBR’s content delivered to your inbox, sign up for the Daily Alert newsletter.
As the U.S. began to shut down in mid-March in response to the coronavirus pandemic, economic forecasts were thrust into the spotlight. Second only to public health concerns, the question of what happens next to our jobs, businesses, and the economy at large have become all-consuming for a country on edge.
