Dow Jones Economic Sentiment Indicator Rises to 35.5 for Sixth Consecutive Monthly Increase
August 31 2009 - 8:50AM
PR Newswire (US)
Continued Improvement Viewed As Offering Cautious Support To View
That U.S. Economy May Be Moving Toward Recovery NEW YORK, Aug. 31
/PRNewswire/ -- The Dow Jones Economic Sentiment Indicator (ESI)
reached its highest level in a year rising to 35.5 in August, the
sixth consecutive monthly increase. The ESI's continued improvement
lends guarded support to the growing view that the U.S. economy may
be moving out of recession and into a period of recovery. "In
addition to the ESI's positive trend, we've seen several months of
positive movement in the Leading Economic Index and industrial
production which have in the past signaled a move to economic
growth," said Dow Jones Newswires 'Money Talks' columnist Alen
Mattich. "The continued improvement of the ESI coupled with the
gains of other leading indicators is a sign that the U.S. economy
continues to steer a course towards recovery." Mattich points out,
however, that it would be premature to call an end to the
recession. "It will be months before the National Bureau of
Economic Research determines the timing of the recession's trough
and a return to growth. We continue to wait for the ESI to reach
the upper 30s before anticipating an end to recession and
thereafter for it to reach the upper 40s before sentiment suggests
the recovery is sustainable," Mattich said. The National Bureau of
Economic Research (NBER) is the official arbiter of U.S. economic
cycles, identifying the dates of peaks and troughs that frame
economic recession or expansion. On December 1, 2008, the NBER
announced that it had determined the current recession began a full
year earlier, in December 2007. The NBER's determination that
November 2001 marked the end of the U.S. economy's previous
recession was announced on October 21, 2003, 23 months after the
economic recovery had begun. 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. It
uses a numerical scale from 0 to 100 to express the balance of
sentiment in articles about the economy. 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. Unlike some other
indicators where 50 is a clear break-point between recession and
recovery, the ESI needs to be read with reference to longer trends.
Based on the ESI's performance since 1990, previous recoveries have
been marked by substantial month-to-month gains, with a jump of
three points seeming to be a sign of significant improvement. A
drop below 50 marks the point at which there is a clear risk of a
slowdown. The Dow Jones Economic Sentiment Indicator is calculated
using a proprietary algorithm through Dow Jones Insight, a media
tracking and analysis tool. More information about the Economic
Sentiment Indicator and its development is available at
http://solutions.dowjones.com/esi. Dow Jones Insight 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 News Corporation company. (Nasdaq: NWS,
NWSA; ASX: NWS, NWSLV; http://www.newscorp.com/) Dow Jones is a
leading provider of global business news and information services.
Its Consumer Media Group publishes The Wall Street Journal,
Barron's, MarketWatch and the Far Eastern Economic Review. Its
Enterprise Media Group includes; Dow Jones Business &
Relationship Intelligence, Dow Jones Newswires, Dow Jones Factiva,
Dow Jones Client Solutions, Dow Jones Indexes and Dow Jones
Financial Information Services. Its Local Media Group operates
community-based information franchises. Dow Jones owns 50 percent
of SmartMoney and 33 percent of STOXX Ltd. and provides news
content to radio stations in the U.S. 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.
DATASOURCE: Dow Jones & Company CONTACT: Rob Thibault, Office,
+1-609-627-2680, Mobile, +1-609-216-4780, Web Site:
http://solutions.dowjones.com/esi
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