Dow Jones says it has found a way to predict economic performance by analyzing the tone of media reports:
NEW YORK, April 29 /PRNewswire/ — What: Introduction of the Dow Jones Economic Sentiment Indicator (ESI), which testing has shown to be a leading indicator of a variety of measures of U.S. economic performance, based on the relative positive and negative tone of economic reporting in 15 major daily newspapers. [emphasis added*]
The ESI is expressed on a numerical scale from 0 to 100, with a higher number reflecting a more optimistic sentiment in economic references.
The ESI represents one of the most comprehensive and far-reaching examinations of media economic coverage as an economic indicator. It’s based on an analysis of more than five million articles referencing the U.S. economy since 1990.
According to the press release, the ESI forecasted the 2001 and 2008 recessions and the 1992 and 2002 recoveries.
* And assuming we still have15 major daily newspapers by week’s end.