Monday 15 March 2010

Read all about it - we are exiting the recession

My primary source of news nowadays is Google Reader which I have configured to pull news stories from all the sources I feel publish content relevant to me and The Hatchery. Last week I noticed a change that made me think - can we use the news to quickly predict economic fluctuations?

Well of Course You Say

The aforementioned statement may sound silly and obvious but the simplicity of the indicator I am referring to struck me as slightly different. On Saturday morning I opened Google Reader to find 486 unread news articles. Wow. On average, the number of unread articles I receive every morning is somewhere between 200 and 280, but on Saturday (and ever since), that number has more than doubled.

After reading (or at least scanning) them all over the past 3 days, I can say that I am struck by the amount of positivity in many of the articles and blog posts. The underlying sentiment is not as dreary and filled with doom and gloom outlooks and predictions. Can we deduce that we might be seeing a turning point? Could the most simplistic economic indicator be the number of news articles published across a random selection of sources?

The Indicator

In the past it was pretty difficult to determine the quantity of news published by multiple sources. One might have noticed a slightly thinner newspaper or fewer ads in print, but generally the comparisons we could draw were limited to a single source and their historical track record. Google Reader throws that limitation out of the window and I for one am excited by the insight I feel it provides.

The economic indicator I believe I may have stumbled upon needs context - like all other useful indicators. For example, approximately 60% of my news comes from Silicon Valley or the USA and another 10% from South Africa. So a rise in the number of articles or improvement in general sentiment may be just that - general; and may only be relevant to the region(s) in which the majority of one's news articles are published.

What do you think? Until the economies of the world have recovered and an approximate turning point identified, can this potentially be used as a simple indicator?

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