Survey Sees “Reshaping” of Macro Research Industry

A new survey finds that economists from leading asset managers, top banks and broker research firms, NGOs and government agencies are adopting new predictive tools, alternative data and generative AI to “reshape” how they conduct macro research.

The study, from Coalition Greenwich, in association with Bloomberg, finds that prediction markets are the number one tool economists are using to analyse the market effects of the next major event, the US Presidential Election – beating real-time and state-level polls, social media, and campaign donations.

Equally, the survey finds that in addition to prediction markets, economists rank alternative data, in particular social media sentiment analysis and real-time consumer transaction data – as well as Generative AI-enhanced analytics as the second and third most important tools to analyse macro drivers over the next 12 months.

Coalition Greenwich says early career economists “highly value” generative AI for use in forecasting models as the single area of their workflow that may be transformed in the coming two-to-three years. Forecasting models generate predictions about market trends, currency movements or economic indicators.

The survey finds that the role of economists continues to evolve as they conduct thematic and market analysis on government policy responses, the effects on the labour market and other macro drivers that move markets and impact investment portfolios. Economists’ heightened demand for alternative data and generative AI-enhanced research solutions reveal how the macro investment industry may evolve in the future, it adds, noting that the majority of early-career economists believe alternative economic indices are now more valuable than traditional point-in-time metrics when analysing the US economy.

Economists also indicate their top priority is seamless access to consistent and compatible data across analytical tools and data feeds when analysing macro trends. This emphasis on data quality and interoperability is an essential component to the rapid adoption of generative AI, Coalition and Bloomberg state.

“With news cycles getting ever shorter and traders reacting more quickly to market events, economists can no longer count solely on widely disseminated macro-metrics to provide actionable commentary,” observes Kevin McPartland, head of market structure and technology research at Coalition Greenwich. “As such, economists are increasingly looking to complement traditional metrics with new predictive tools and alternative datasets to understand the macroeconomic environment in a more nuanced way. And while the use of AI remains limited as a predictive tool, some cutting-edge economists are beginning to see results.”

Michael McDonough, chief economist for financial products at Bloomberg, adds, “Advancements in technology have delivered macro investors access to vastly larger datasets and accelerated trading strategies, but there is still a need for analytics that enable them to seamlessly interpret complex macro trends. In the future, economists will use proprietary tools that feature alternative economic indices as well as generative AI solutions so they can interpret information and communicate insights with unprecedented speed and precision.”