Introducing Atlas Analytics

GDP Forecasting Using Satellite Imagery

Predicting GDP in Real-Time Using Satellite Imagery

Currently macroeconomic forecasting is opaque at best. In 2022, CNN reported that 72% of leading economists predicted that the US would fall into recession within the next year¹; it’s only now becoming apparent that this was false. Juxtapose this with 2007’s recession and ask yourself, how many forecasters foresaw the Global Financial Crisis? Clearly economists are not very good at forecasting the economy.

Macroeconomic Forecasting from Outer Space

Henderson, Storeygard and Weil (2012) described their use of nightlights visible from outer space to proxy economic activity, and a growing body of research has since demonstrated the viability of employing satellite imagery for economic analysis.² But rather than using these images as a single snapshot in time, our team has employed the satellites already circumnavigating the globe to provide the information necessary for a continuous prediction of economic activity. In short, our emerging company Atlas Analytics has developed a novel technique for conducting economic forecasting using real-time satellite imagery.

Atlas Analytics’ Prediction Accuracy

How accurate are Atlas Analytics’ methodology and predictions? 

Regarding the methodology, our team has conducted numerous tests to evaluate the association between the satellite imagery of the built environment and economic activity. Utilizing regressions, we have found that the t-statistic on our satellite variables were nearly 3.5 standard deviations from the mean, suggesting it was very unlikely (less than 1 in 1000) that this was a false positive. Even more promisingly, when we ran a variable importance test on the AI prediction algorithm, of the top 10 most important variables, our satellite imagery data constituted seven, even when including key traditional variables such as inflation and previous GDP.

Yet, the ultimate test of our predictive capability are the predictions themselves. Above is a chart of our prediction accuracy since Q1 2022 and you can learn more about our accuracy on our Predictions page.

The Need for Real-Time Economic Activity Data

How can the economic and finance community make cogent decisions without accurate knowledge of economic growth? Atlas Analytics’ algorithm ROY provides a solution: real-time GDP data. Ultimately, macroeconomic forecasting is a field ripe for innovation, and we believe we have done just that. Now only time will tell.

Want to Trade Atlas Analytics?

Once a month, Atlas Analytics posts our proprietary GDP forecasts and price targets for four macro-exposed ETFs to make you a better-informed trader. Want access, visit our Client Portal page or subscribe below.

1. CNN. “72% of economists expect a US recession by the middle of next year”. August 22, 2022.

2.  Henderson, Storeygard and Weil. “Measuring Economic Growth From Outer Space.” April 2012.