Increasingly positive media coverage of consumer spending contributed to a significant rise in the Dow Jones Economic Sentiment Indicator (ESI) in November. The ESI rose to 38.3, up from 36.9 in October.

The Dow Jones Economic Sentiment Indicator aims to predict the health of the U.S. economy by analyzing the broad coverage of 15 major daily newspapers in the U.S. The ESI has risen 11 out of 12 months since its low of 22.2 in November 2008, data that confirm the consensus among economists that the U.S. recession ended sometime early in the summer.

One key area of improvement in recent months has been in articles on shopping, a key indicator of consumer confidence as the holiday season approaches. One way that the indicator helps indicate future economic trends is by measuring gloomy articles such as Christmas gift guides which focus on bargain-hunting or store closures and balancing those with a more positive sentiment such as increasing spending or store openings.

In November 2008 gloomy shopping-related articles outweighed positive ones by three to one, helping drive the ESI down to its lowest ever level of 22.2. This November the balance is much more equal, indicating a healthier economic outlook and pushing the indicator back to levels not seen since the collapse of Lehman Brothers - although retail-related articles with negative sentiment still remain in the majority.

"The Dow Jones Economic Sentiment Indicator climbed to its highest level since August 2008, suggesting the U.S. economic recovery is entrenched and that the number of jobs lost during the month continued to shrink sharply," Dow Jones Newswires 'Money Talks' columnist Alen Mattich said. "Market expectations for November job losses have been falling, a view supported by the indicator. This in turn could underpin retail sentiment over the next month."

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.

Unlike some other indicators where 50 is a clear break-point between recession and recovery, the ESI needs to be read with reference to longer trends. Based on the ESI's performance since 1990, previous recoveries have been marked by substantial month-to-month gains, with a jump of three points seeming to be a sign of significant improvement. A drop below 50 marks the point at which there is a clear risk of a slowdown.