How uncertain is the fed’s forward guidance? text-based evidence from earnings calls and corporate investment

This study investigates the impact of receiver-side forward-guidance uncertainty (FGU) on corporate investment in the United States. Using over 80,000 earnings-call transcripts from S&P 1500 firms between 2010Q1 and 2025Q2, we employ FinBERT—a finance-specific large language model—to construct a novel firm-quarter FGU index that captures managerial perceptions of Federal Reserve policy signals. We estimate panel fixed-effects and instrumental-variable models to address endogeneity concerns, finding that a one-standard-deviation increase in lagged FGU reduces the capital-expenditure-to-assets ratio by 0.6–0.9 percentage points, with stronger effects among financially constrained and interest-rate-sensitive firms. Robustness checks, alternative specifications, and dynamic local projections confirm the persistent and economically significant drag on investment. Translating firm-level elasticities to aggregate terms, an interquartile FGU rise implies a USD 12 billion quarterly reduction in U.S. nonresidential private investment. Our findings underscore that clarity, consistency, and credibility in central-bank communication are critical for sustaining real-sector investment. © The Author(s), under exclusive licence to Springer Nature B.V. 2025.