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DOW JONES ESI POINTS TO RECOVERY

30 April 2009 by Cullen Roche 3 Comments

A new index created by Dow Jones is pointing to a recovery in the economy.

NEW YORK, April 30, 2009 – A unique new monthly economic indicator introduced today by Dow Jones offers what could be an early signal that the economy may be lifting off its low point but any recovery remains very tentative.

The Dow Jones Economic Sentiment Indicator (ESI) edged higher in April to 27.6, up from 26.3 in March. The ESI aims to predict the health of the U.S. economy by analyzing the coverage of 15 major daily newspapers in the U.S. It uses a numerical scale from 0 to 100 to express the balance of sentiment in articles about the economy.

The figure for April is still well below the levels of last summer and is the 7th weakest recorded in nearly two decades. The indicator touched a low of 22.2 in November, but has seen a small but steady rise since then.

“The green shoots of recovery may be making an appearance,” Dow Jones Newswires “Money Talks” columnist Alen Mattich said, “but they are as yet very small and very pale.”

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Bear in mind that this appears to be an economic indicator rather than a market indicator.  In 2001 when the indicator was calling a bottom you would have been whipsawed when the market retrenched in 2002.  Interesting data nonetheless….

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Comments
  • DanH

    Reminds me of the NBER metrics for calling a bottom. Kind of worthless.

    04/30/2009 at 2:18 PM
    • Cullen Roche TPC

      Yeah, best to take these kinds of stats with a grain of salt. We could very well be seeing an economic bottom, but that by no means says we're at a market bottom….

      04/30/2009 at 2:24 PM
  • matthew

    Now that it is mid september. What do you think now.

    I feal like we will be back up in the 1200 dow around late 2010 early 2011

    09/14/2009 at 1:11 PM