Wednesday, April 23, 2008

Online Consumers Speak Negatively about the Economy

I've been monitoring online buzz about the economy over the past few months and I've found some interesting results. I will start of by showing a trend of economy discussion online from October 1, 2007 through March 31, 2008.

Economy Discussion Trend

Discussion about the economy is trending upwards. Recent spikes in buzz are largely caused by consumers discussing bank mergers and their opinions of the economy. Below is a key highlighting several call-outs on the trend line.

Key Events Creating Buzz:
A. 10/29/07 - Merrill Lynch reports $7.9 billion write-down.
Merrill Lynch’s CEO, Stan O’Neal and Citi’s CEO, Charles Prince resign.
B. 12/6/07 – Consumers discuss President Bush’s mortgage plan.
C. 1/7/08: Bears Stearns’ CEO James Cayne resigns
D. 1/13/2008 – Consumers discuss the BoA Countrywide merger.
E. 1/21/2008 - 1/22/08: U.S. Federal Reserve announces surprise 0.75% rate cut; DJIA loses 400 points as global markets name the day, “Black Monday.”
F. JP Morgan buys Bear Stearns for $2 a share

Additionally, I have been tracking sentiment among consumers talking about the economy online in two month intervals since October 2007. More consumers have a mixed / negative outlook on the economy from December 1 – March 31, 2008 compared to the October 1 – November 30, 2007. An increase in negative buzz results from consumers expressing their concerns about the U.S. economy potentially going into a recession from December 1 through January 31, 2008. However, negative buzz February 1 through March 31, 2008 emanates from consumers discussing potential fraud and ethics violations associated with the subprime debacle.

Listed below are a few sample verbatim to support my most recent findings. Consumers speculating about whether fraud played a role in the subprime meltdown express their discontent online.

“[Big News: Subprime Lenders Get Big Accounting Break At Sec]… I thinks that's important news, or exists there another thread on it. FFS, they will just be allowed to hide it all. “, 2008-02-01

“Blaming all this on the gov is a good start, Grizz. But it seems all the congress wants to do his slap down the lenders, even though they were the ones who encouraged this practice. The left wanted low income folks; ie people who can't afford a house to have a really really big one. They caused the problem, now all they want to to is fleece the mortgage companies and responsible borrowers for doing want was expected from them. Blaming all this on Bush is inaccurate, but typical. I do not blame it ALL on the government, because crooks and con men will always find a way. Your weak attempt to whitewash this administration in particular and the general anti-regulation enforcement tilt of Republicans in general just doesn't wash. Government regulations exist because of those who would take advantage of people in just about any situation, whether it be the food on your table, drugs in your medicine cabinet, or a virtually incomprehensive mortgage instrument. Point of fact, the regulators, if they existed at all, were asleep at the switch on the sub-prime mess and the bankers were no less culpable with their bottomless greed”, 2008-02-27

“I'm would never vote for McCain, I would rather write-in a vote for Minny Mouse (which is what I am leaning towards at this point). But I still have a hard time accepting that me, the tax payer, has to be part of the solution that was the sub-prime mortgage scandal. The companies that profited off of these actions should be the ones to bail the people out. Why do I have to be the one to fix others financial mistakes ? Next thing you know we will have to bail out folks who take super high interest credit cards because they did not read the small print. People should have some sort of responsibility for their actions and should not be bailed out by the rest of us who are able to make smarter decisions when it comes to our finances.”, 2008-03-10

1. Buzz volume is depicted as a percentage of 433,173,653 total messages by day occurring between October 1, 2007 and March 31, 2008
2. Information about “Black Monday” 2008 can be found at
3. Given time constraints (e.g. work, life in general), I was only able to sample a 100 random messages about the economy per time frame. Therefore, I would not consider these findings to be statistically significant, but more directional.

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