Dow Jones Economic Sentiment Indicator Jumps 2.2 to 46.1 in December
NEW YORK, Jan. 3, 2011 /PRNewswire/ — Driven by a wide range of upbeat grassroots economic news, the Dow Jones Economic Sentiment Indicator (ESI) jumped 2.2 points to 46.1 in December, breaking out of its previous range and indicating the economy could be picking up momentum at the start of 2011.
Dow Jones Newswires “Money Talks” columnist Alen Mattich said: “Improved sentiment about the U.S. economy is pointing to a solid, even if unspectacular, recovery in growth, including an upswing in job creation.”
The ESI is determined by in-depth analysis of national news coverage across 15 daily newspapers. It held steady at 43.9 in October and November.
Upbeat coverage about the festive shopping season was only a modest contributor to the upward rise. The bulk of the improvement was driven by a wide range of positive economic news across the nation. There was a positive feel to coverage of real estate, including coverage of brisk sales of mansions over $3 million in Westchester, NY; pockets of recovery in Bay Area commercial real-estate; and buyer interest in the Telecom Corridor, a business park in northern Dallas. However there was also plenty of other positive news outside real estate, such as a pickup of port throughput at Los Angeles/Long Beach, the nation’s busiest port complex and busy sales at car dealerships across the U.S.
Positive media coverage on the return of $3 per gallon gas helped push up the indicator as well, with most reports portraying the rise as a sign of returning economic activity. Although Mr. Mattich noted that “a significant price increase could reverse this positive effect as it would eat into households’ disposable income.”
The Dow Jones Economic Sentiment Indicator aims to predict the health of the U.S. economy by analyzing the coverage of 15 major daily newspapers in the U.S. Using a proprietary algorithm and derived data technology, the ESI examines every article in each of the newspapers for positive and negative sentiment about the economy. The indicator is calculated through Dow Jones Insight, a media tracking and analysis tool. The technology used for the ESI also powers Dow Jones Lexicon, a proprietary dictionary that allows traders and analysts to determine sentiment, frequency and other relevant complex patterns within news to develop predictive trading strategies.
The ESI’s back-testing to 1990 shows that the ESI clearly highlighted the risk that the U.S. economy was sliding into recession in 2001 and 2008 and suggests the indicator can help predict economic turning points as much as seven months in advance of other indicators. More information about the Economic Sentiment Indicator and its development is available at http://dowjones.com/esi .
About Dow Jones Insight
Dow Jones Insight (http://www.dowjones.com/product-djinsight.asp) uses innovative text mining and analytic technologies to help organizations keep informed about relevant issues, news, conversations and trends emerging in mainstream, Web and social media. Dow Jones Insight’s global content collection includes more than 25,000 news and information sources as well as blogs, message boards, and posts from YouTube and Twitter.
About Dow Jones
Dow Jones & Company is a global provider of news and business information and a developer of technology to deliver content to consumers and organizations across multiple platforms. Dow Jones produces newspapers, newswires, Web sites, apps, newsletters, magazines, proprietary databases, conferences, radio and video. Its premier brands include The Wall Street Journal, Dow Jones Newswires, Factiva, Barron’s, MarketWatch, SmartMoney and All Things D. Its information services combine technology with news and data to support business decision making. The company pioneered the first successful paid online news site and its industry leading innovation enables it to serve customers wherever they may be, via the Web, mobile devices and tablets. The Dow Jones Local Media Group publishes community newspapers, Web sites and other products in six U.S. states. Dow Jones & Company (www.dowjones.com) is a News Corporation company (NASDAQ: NWS, NWSA; ASX: NWS, NWSLV; www.newscorp.com).
The Dow Jones Economic Sentiment Indicator is provided for analysis purposes only and Dow Jones makes no representation that the indicator is a definitive predictor of sentiment or the health of the U.S. economy. This report does not in any way reflect an opinion of Dow Jones regarding the U.S. economy or the suitability of any investments.
SOURCE Dow Jones & Company