Dow Jones New Indicator Measures Media for Economic Health

By: E&P Staff Dow Jones has introduced a new economic indicator that measures media coverage to gauge economic conditions. The Dow Jones Economic Sentiment Indicator (ESI) aims to predict the health of the economy by analyzing the coverage of 15 major daily newspapers in the U.S.

The ESI is based on a scale of 0 to 100. Dow Jones cautions that indicator "needs to be read with reference to longer trends."

The ESI is calculated using proprietary algorithms through media tracking and analysis tool Dow Jones Insight.

The indicator has been back-tested to 1990 for historical insight. The analysis shows that the ESI highlighted the risk that the U.S. economy was heading towards a recession in 2001 and again in 2008.

"The Dow Jones Economic Sentiment Indicator represents a valuable tool for measuring and anticipating key turning points in the economy," Clare Hart, president of Dow Jones Media Group, said in a statement. "And even though it is being released for the first time today, the ESI's ability to anticipate those turning points is supported by nearly 20 years worth of data."

The ESI for April stands at 27.6 up from 26.3 in March. The figure for April is still well below the levels of last summer, Dow Jones said, and is the seventh weakest recorded in nearly two decades.