Corporate Beige Book: Better Tone, Little Election Talk


  • Our analysis of third quarter earnings conference call transcripts indicates sentiment among corporate executives improved.
  • For all of the media attention on the U.S. election, corporate executives spent surprisingly little time on the topic during earnings conference calls.
  • Actual third quarter results and improved management tone support our expectation for mid-to-high single digit earnings growth in 2017.

Corporate sentiment improved during the third quarter based on our analysis of earnings conference call transcripts for third quarter 2016 earnings season. We saw greater use of strong and positive words, whereas talk of recession was again virtually non-existent and the election surprisingly garnered relatively little attention. Brexit-related commentary and fewer currency mentions suggest stability in the U.K., while oil and China continued to garner significant attention.


When we count positive and negative words from earnings call transcripts, we see that sentiment among corporate executives improved during the third quarter. More strong and positive words (e.g., strong, robust, solid, improving, good) were counted in the call transcripts sampled [Figure 1]. The word “good” in particular saw a big jump from the second quarter (from 153 to 227). Meanwhile, the weak words (e.g., weak, soft, difficult, and challenging) only increased marginally, pushing the differential and ratio of strong to weak words both higher. The differential between strong and weak words rose 20% to 672 in the third quarter from the second quarter, whereas the ratio of strong to weak words rose from 2.4 to 2.6 [Figure 2].

We observed an increase in the overall use of these strong and weak words for the third straight quarter. Last quarter, we speculated this increase reflected more subtle optimism. It may also be attributed to increased macroeconomic uncertainty, which may have led to increasingly emotional comments from executives.