CONSUMER CONFIDENCE INDICES AND SHORT-TERM FORECASTING OF CONSUMPTION

There is growing interest in examining the short-term link between survey-based confidence indicators and real economic activity. This paper builds on previous studies to establish whether there is a short-term predictive relationship between measures of consumer confidence and actual consumption, in a range of major industrial countries. It then extends such previous analyses by assessing whether this relation has changed over time, and whether we can attribute any time-varying relation to structural developments in the economy, such as financial deepening and the increasing role of house prices in determination of consumption. Copyright © 2009 National Institute of Economic and Social Research. Journal compilation © 2009 Blackwell Publishing Ltd and The University of Manchester.