Forecasting with news sentiment: Evidence with UK newspapers

We investigate the performance of newspapers for forecasting inflation, output and unemployment in the United Kingdom. We concentrate on whether the economic policy content reported in popular printed media can improve on existing point forecasts. We find no evidence supporting improved nowcasts or short-term forecasts for inflation. The sentiment inferred from printed media, can however be useful for forecasting unemployment and output. Considerable improvements are also noted when using individual newspapers and keyword based indices.