Dow Jones Economic Sentiment Indicator Suggests Slow Growth Ahead for U.S. Economy
NEW YORK, June 30, 2011 /PRNewswire/ — Following two months of steady pace, the Dow Jones Economic Sentiment Indicator dropped to 44, down from 46.6 in May and April. U.S. news coverage in June was mostly negative, with the focus on U.S. government debt concerns and the new regulation of the financial industry.
“Although debt and regulation concerns were looming, the underlying news about the state of the U.S. economy remained supportive during the month, suggesting the recovery continues at the same subdued but steady pace,” says Dow Jones Newswires “Money Talks” columnist Alen Mattich.
The ESI is determined by in-depth sentiment analysis of national news coverage across 15 daily newspapers. It is reported on a scale of 0 to 100; higher numbers represent increasingly positive sentiment.
The index has been weak throughout the first half of 2010, and in June, the ESI’s reading was largely influenced by global debt discussions. In Europe, worries about the affect Greek debt default could have on the global financial system garnered negative attention, while growing support of a bailout plan and Athen’s passage of an austerity plan were viewed as positive.
Outside of fiscal concerns, positive media coverage in June mentioned falling oil prices.
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 newspaper articles 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 indicator 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. For more information, visit 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