(Almost) 200 Years of News-Based Economic Sentiment Jules H. van Binsbergen, Svetlana Bryzgalova, Mayukh Mukhopadhyay & Varun Sharma – Working Paper 32026. DOI 10.3386/w32026  Issue Date January 2024. “Using text from 200 million pages of 13,000 US local newspapers and machine learning methods, we construct a 170-year-long measure of economic sentiment at the country and state levels, that expands existing measures in both the time series (by more than a century) and the cross-section. Our measure predicts GDP (both nationally and locally), consumption, and employment growth, even after controlling for commonly-used predictors, as well as monetary policy decisions. Our measure is distinct from the information in expert forecasts and leads its consensus value. Interestingly, news coverage has become increasingly negative across all states in the past half-century.”

“Because the public needs to be aware of important risks in society, a certain level of general negative bias in news coverage is expected, particularly if one adheres to the view that traditional media fulfills a watchdog/surveillance function. Although this argument could explain the average level of negativity in news reporting, it does not address its increasingly downward trend. What factors could speak to it? The world of news, especially that of printed newspapers, has become increasingly competitive over the years. Therefore, It is natural to expect that to attract a larger audience, many outlets have been increasingly focusing on negative news.”