Although the rise is the best in five months, it remains short of the strong monthly gains the ESI made for much of the first three quarters of 2009.
"Although the rise is modest, it is better than the stagnation of recent months," Alen Mattich, Dow Jones Newswires "Money Talks" columnist, said. "If repeated in April it could indicate that the economy is starting to haul itself slowly upwards again."
The ESI's gain adds weight to the view that after a weak start to 2010 the economy may again be gaining strength. The Conference Board's Consumer Confidence Index registered a gain in March after falling unexpectedly in February. The Index remains below its levels of December and January. The University of Michigan/Reuters Consumer Sentiment Index's remained flat in March, better than the drop many analysts had forecast.
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 logic of using textual analysis of newspapers as an objective and timely measure of expectations is certainly appealing," Dr. Bill D. McDonald, finance professor at Notre Dame University, said. "The Dow Jones ESI contributes information beyond the traditional aggregate index of leading indicators and, although correlated with the other consumer survey measures, seems to measure information not captured by the surveys."
