DJ Economic Sentiment Indicator Increases in 11 of Last 12 Months to Highest Level Since August 2008

Posted on 12/01/09 at 10:03am by Professor Mark J. Perry

Increasingly positive media coverage of consumer spending contributed to a significant rise in the Dow Jones Economic Sentiment Indicator (ESI) in November. The ESI rose to 38.3, up from 36.9 in October.

The Dow Jones Economic Sentiment Indicator aims to predict the health of the U.S. economy by analyzing the broad coverage of 15 major daily newspapers in the U.S. The ESI has risen 11 out of 12 months since its low of 22.2 in November 2008, data that confirm the consensus among economists that the U.S. recession ended sometime early in the summer.

“The Dow Jones Economic Sentiment Indicator climbed to its highest level since August 2008, suggesting the U.S. economic recovery is entrenched and that the number of jobs lost during the month continued to shrink sharply,” Dow Jones Newswires 'Money Talks' columnist Alen Mattich said. “Market expectations for November job losses have been falling, a view supported by the indicator. This in turn could underpin retail sentiment over the next month."

The ESI represents one of the most comprehensive and far-reaching examinations of media coverage as an economic indicator. 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.

Bookmark/Search this post with: