Media Coverage as an economic indicator

Can the U.S. economy be predicted by reading the newspaper – or 15 newspapers?  The Dow Jones folks think so. 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 to look for positive and negative sentiment about the economy in every article. ”

According to Dow Jones, the indicator has been back-tested to 1980 and is good at predicting trends about seven months out.  I’m going to start following it and see how it does.  Right now, it’s trending downward a bit in spite of constant news reports that the economy is recovering.  Maybe I’m just reading the wrong newspapers.  For example, yesterday I saw a report that auto sales are now predicted to reach around 13 million in 2010 instead of the previously predicted 12 million.  Of course, that’s just one little stat.  At any rate, for this news junkie with an MBA this is my cup of tea.

One response to “Media Coverage as an economic indicator

  1. “Right now, it’s trending downward a bit in spite of constant news reports that the economy is recovering.”

    Actually, it looks to be trending up, with a slight flattening since November.

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s