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Consumer confidence and household consumption decisions

Author

Listed:
  • Baumann, Adam
  • Caprari, Luca
  • Dossche, Maarten
  • Kocharkov, Georgi
  • Kouvavas, Omiros

Abstract

Consumer confidence plays an important role in determining economic activity. This box presents a consumer confidence indicator derived from the ECB’s Consumer Expectations Survey to explore its relation with household consumption. Analysis reveals that confidence levels vary by income quintile, with high-income households demonstrating greater sensitivity to economic news, in line with their greater financial literacy and higher share of discretionary spending. The consumer confidence indicator at the individual level is closely related to the actual spending of households, corroborating its usefulness for monitoring ongoing consumption growth. Developments in consumer confidence in 2025 to date point towards muted consumption growth overall, especially for households in the top 20% income bracket. JEL Classification: D12, E21

Suggested Citation

  • Baumann, Adam & Caprari, Luca & Dossche, Maarten & Kocharkov, Georgi & Kouvavas, Omiros, 2025. "Consumer confidence and household consumption decisions," Economic Bulletin Boxes, European Central Bank, vol. 5.
    • Handle: RePEc:ecb:ecbbox:2025:0005:1
    Note: 3577821
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    Keywords

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    JEL classification:

    • D12 - Microeconomics - - Household Behavior - - - Consumer Economics: Empirical Analysis
    • E21 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Consumption; Saving; Wealth

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