Dow Jones Economic Sentiment Indicator Drops in September; Sharp Erosion Late in Month Points to Growing Risk to Recovery

NEW YORK, Sept. 30 /PRNewswire/ -- Following four months of modest but steady gains, the Dow Jones Economic Indicator (ESI) fell to 40.7 in September, down from 43.2 in August and its largest one-month drop since October 2008.  And while the Indicator has historically declined in September, there are signs that the economic recovery is faltering with a sharp increase in negative economic stories during the last seven days of the month.

"It could be the decline merely reflects a seasonal effect because on balance over the past two decades the ESI has tended to dip during September," Dow Jones Newswires "Money Talks" Columnist Alen Mattich said.  

Mattich points out, however, "A weekly analysis of the ESI showed particularly sharp erosion in the Indicator during the past seven days.  Were this trend to continue over the coming weeks, it would signal a sharply increasing risk of a double dip for the U.S. economy."

The ESI is determined by in-depth analysis of national news coverage across 15 daily newspapers.

Among the negative stories in the media during the month were an article charting the cost to the Boston economy of the Red Sox failing to make the playoffs; shortcomings in Obama's flagship mortgage-relief program; the financial problems of the Washington National Opera; and coverage of census figures that show more unmarried couples are living together perhaps as a result of harsher economic conditions.

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. The indicator is calculated through Dow Jones Insight, a media tracking and analysis tool. The technology used for the ESI also powers Dow Jones Lexicon, a proprietary dictionary that allows traders and analysts to determine sentiment, frequency and other relevant complex patterns within news to develop predictive trading strategies.

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. 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.

SOURCE Dow Jones & Company

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