Consumer confidence and aggregate consumption expenditures in the United States

2013

Non technical summary 5

Empirica, 2014

The consumer confidence index is a highly observed indicator among shortterm analysts and news reporters and it is generally considered to convey some useful information about the short-term evolution of consumer expenditure. Notwithstanding this, its usefulness in forecasting aggregate consumption is sometimes questioned in empirical studies. Overall, the conclusions seem to be that the extensive press coverage about this indicator is somewhat undue. Nevertheless, from time to time, attention revamps on consumer confidence, especially when turns of the business cycle are expected and/or abrupt changes in this indicator occur. Some authors argue that in such events consumer confidence is a more relevant variable in predicting consumption. This fact can be a signal that a linear functional form is inadequate to explain the relationship between these two variables. Nevertheless, the choice of a suitable non-linear model is not straightforward. Here I propose that a non-parametric model can be a possibile choice, in order to explore the usefulness of confidence in forecasting consumption, without making too restrictive assumptions about the functional form to use.

2015

This paper investigates how well consumer confidence predicts households future consumption expenditure. Our findings document considerable variety in the degree to which confidence measures accurately forecast consumption across selected euro area countries and periods. First, we explore the leading role of consumer confidence in forecasting consumption growth. We find that the consumer confidence index improves forecasts of household consumption expenditure appreciably during times of financial distress, especially in Italy and Portugal. Further, we show that the financial sub-index of consumer confidence provides more nuanced information than the aggregate index. Indeed, over the past few years, expectations about future personal financial situations proved particularly helpful in forecasting total consumption expenditure in France, Italy and Portugal. For Germany, in contrast, no measures of confidence provide information beyond what is supplied by other economic indicators for ...

Journal of Business Economics and Management, 2009

This study examines the relationship between consumer confi dence, personal consumption, and other relevant economic and fi nancial variables for 9 European Union countries. It is argued that consumer confi dence is an early indicator of future rates of growth in an economy through the consumption channel. Therefore, an increase in consumer confi dence should translate into higher rates of consumption in the future, leading to a possible rise in economic growth. Our panel data analysis, conducting panel unit root tests and panel cointegration tests, tries to measure the effects of changes in consumer sentiment on personal consumption expenditures while accounting for other signifi cant economic and fi nancial variables such as stock exchange index, real exchange rates and interest rates. The empirical fi ndings show the existence of a longrun relationship. Thus, consumers are able to detect early signals about future rates of economic growth as they contribute through the consumption channel.

Handbook of Research on Globalization, Investment, and Growth-Implications of Confidence and Governance

This chapter attempts to find out the impact of recent recession on the consumption pattern through consumer confidence index (CCI) of selected developed and developing economies. This chapter examines how the macroeconomic variables like growth rate, inflation, unemployment rate and debt-GDP ratio etc. influence the consumer's confidence during 1996-2012, in which the crisis occurred in 2008. Moreover, in this chapter we have explained the role of consumptions sentiment in terms of consumer confidence regarding future expectation. Apart from that, from the panel data set of 11 countries, we have found that more or less all the economies including the United States have experienced downward movement of consumer's confidence in the presence of the great recession of 2008-2009.

Mnb Bulletin, 2010

The views expressed in this article are those of the author(s) and do not necessarily reflect the offical view ot the Magyar Nemzeti Bank. Chart 1 Annual growth of consumption expenditures and retail sales vs. developments in the GKI confidence index 1 Precautionary savings are generated when consumers reduce their consumption by saving a portion of their income to cover future risks. 2 For details on the permanent income hypothesis see, for example, Jakab M. and Vadas (2001). 3 While several confidence surveys cover domestic households, due to the longer available time series and the possibility of international comparison, MNB uses the GKI index. 4 Further details on the survey can be found on the websites of the European Commission and GKI (

Yönetim ve Ekonomi Araştırmaları Dergisi, 2021

The concept of consumer confidence and its effects on macroeconomic variables have been subject to extensive research since it was devised in the 1940s. Empirical studies suggest that it is one of the leading causes of macroeconomic fluctuations through its effects on household consumption. Consumer durables spending and household borrowing in particular are found to be sensitive to consumer confidence. In this study, a stock-flow-consistent system dynamics model is developed to explain how consumer confidence affects aggregate household behavior and the macroeconomic dynamics of the economy. The simulation results confirm that consumer confidence strongly affects the economy's dynamic behavior and households' psychological parameters determine the stability properties of the economy.

2015

This paper examines the link between consumer sentiment and consumption expenditures in Nigeria. It assesses the predictive ability of consumer confidence indices and selected macroeconomic indicators using a simple autoregressive model which addresses the issue of how confidence indicators bring additional information beyond economic fundamentals. Given the paucity of monthly data, cubic spline interpolation algorithm was used to convert quarterly indicators from 2008Q2 – 2014Q2 into monthly series. From the analysis of the consumption model estimated, we find that the in-sample forecast performed well with little error margin and the out-of-sample values for the next six month were estimated. The results show that the confidence indicator could influence economic performance and be a good predictor of household consumption growth in Nigeria. The paper stressed that care must be exercise particularly during period of economic uncertainty and fluctuations in using the best model for...

Temi Di Discussione, 2003

The paper examines the evolution of consumer confidence indices in Australia,

Applied Economics, 2017

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