Background

Over the years an increasing amount of research has been done into how media reporting can be used as indicator for state of the economy. Other research has highlighted that the way economic news is reported can explain why consumer sentiment sometimes departs from economic fundamentals.

Notable examples include an analysis in Federal Reserve Bank of San Francisco’s Economic Letter (#29, 2004) where they use consumer sentiment in blogs and other media to construct a “layoff index”. This index was in part inspired by The Economist’s R-Index (early 1990s) which tracked frequency of mentions of the word “recession” in Washington Post and New York Times.

Onalytica Indexes share the same basic ideas as these examples: that the level and change in the attention an issue receives in the public debate can increasingly be transformed into an indicator of economic trends and/or the mood or confidence of market participants that impact economic fundamentals of market participants that impact economic fundamentals.