Dow Jones Economic Sentiment Indicator Slips to 38.3 for April; Signals That Recovery Has Yet To Firmly Take HoldSkewed by Negative Coverage of Goldman Sachs' Woes, Indicator Fails to Repeat March's Strong Rise
NEW YORK, April 30 /PRNewswire/ -- Good news about corporate earnings in April was counterbalanced by mixed news about jobs and concern about the Greek economic crisis, causing the Dow Jones Economic Sentiment Indicator to slip to 38.3 from 39.4 in March.
The indicator was also pulled down by coverage of the Securities and Exchange Commission's lawsuit against Goldman Sachs and Congressional testimony focusing on the company's role in the financial crisis of 2007 and 2008. Excluding Goldman Sachs coverage from the searches lifts the April ESI to 40.5, which would be enough to move the indicator above March's level and continue the positive trend - although at a more modest pace.
"Even after excluding Goldman coverage, the ESI rise is quite modest, indicating a still lackluster U.S. jobs market," Dow Jones Newswires "Money Talks" columnist Alen Mattich said. "The soft employment backdrop, in turn, is continuing to dampen consumer sentiment, in spite of other indicators pointing to upward momentum in the economy. The April ESI suggests the U.S. recovery remains vulnerable to a setback."
The weak April ESI comes as U.S. consumers' feelings about the economy remain mixed, if not contradictory. The Conference Board's Consumer Confidence Index registered its second monthly gain in April, rising to its highest level since September 2008. The University of Michigan/Reuters Consumer Sentiment Index, however, dropped in April to its lowest level since August 2009.
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 and derived data technology, the ESI examines every article in each of the newspapers for positive and negative sentiment about the economy. This is the same technology that powers Dow Jones Lexicon, a proprietary dictionary that allows traders, quantitative analysts and asset managers to analyze sentiment, frequency and other relevant complex patterns within news to develop predictive trading strategies.
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.
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://dowjones.com/esi .
About Dow Jones Insight
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 (www.dowjones.com) is a News Corporation company (Nasdaq: NWS, NWSA; ASX: NWS, NWSLV; www.newscorp.com) and a leading provider of global news and business information. Its principal products include The Wall Street Journal, Dow Jones Newswires, Dow Jones Factiva, Barron's and MarketWatch. Through its Local Media Group, Dow Jones operates community-based newspapers and Web sites. Dow Jones also provides news content to television and radio stations.
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.
Posted: April 30, 2010
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