Fed will track Internet sentiment

    One of the 12 regional banks of the Federal Reserve System since December 2011 plans to launch an ambitious project to monitor social media , including Facebook, Youtube, Twitter and other blogs, as well as media content. The aim of the project is to identify opinion leaders and study the reaction of society to the economic decisions that the Fed makes.

    Ideally, regulators probably want to get some kind of objective and updated “Internet sentiment index”, which in the future could become an important economic indicator, such as, for example, the CSI (Consumer Sentiment Index).

    The mood of the public greatly affects the Fed's policies and stock indexes. Such an example. Every month for the past 35 years, the financial world is waiting for the publication of a new CSI (Consumer Sentiment Index). The index reflects the optimism and confidence with which the US population looks to the future. The figure was obtained from an anonymous telephone survey of only 500 random people who are asked five simple questions. The obtained points are averaged to one understandable figure.

    Despite the simplicity and primitiveness of this survey, the CSI dynamics proved to be a reliable predictive indicator of index movement. This figure has now become very important, it sends a clear signal to market players, as well as to the Fed and other economic institutions. They all follow this indicator, which is no less important for markets and economies than, for example, GDP or unemployment.

    The “ Sentiment Analysis and Social Media Monitoring Solution ” may well supplement the CSI in the future if it is also calculated according to simple and understandable rules, at least with the help of linguistic analysis of a random sample of blogs.

    The main function of the Fed is managing the issue of US dollars. It turns out that now the world financiers have decided to closely monitor the mindsets of the online society and take this information into account to regulate the value of money. There is nothing strange in this, because the health of the world economy directly depends on the optimism of people, ordinary inhabitants. By the nature of their activities, financiers are required to use the tools of sociology and psychology. Roughly speaking, if ordinary people become unhappy - you need to reduce the cost of loans, give subsidies and lower the interest rate, if optimism is above average - perhaps a bubble is inflating, it's time to raise the interest rate, increase the value of money and issue steam.

    Maybe the Fed’s attention to the blogosphere is also connected with the Occupy Wall Street flash mob, which started in New York and spread to more than 900 cities around the world, actively heating up in the blogosphere. This movement has clearly shown that virtual online negativity can transform into very real trouble.

    Keyword sentiment analysis in the blogosphere is already being used as an effective tool for market analysis of individual companies and brands, as well as in political technologies. So, in anticipation of the 2012 election, almost all potential candidates for the presidency of the United States presented a very impressive technology platform for monitoring social media. It is clear that the future lies with such tools.

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