Leveraging Digital Data Streams: The Development and Validation of a Business Confidence Index

Quarterly Earnings Calls by public companies represent an example of a rich digital data stream. In this study, we intercept this data stream and use it to create a new business confidence index, the P & W Index^TM. This index correlates with existing business confidence indices, both consumer and business, and correlates with US GDP percentage change. The main advantage is that it can be updated as Earnings Calls are released, and there are typically multiple such releases in a week. In contrast, traditional measures are computed on a monthly or quarterly basis. Further, the index can be computed by industry or region. Initial evidence supports further research to validate and refine the proposed business confidence index.