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Turns in Consumer Confidence: An Information Advantage Linked to Manufacturing

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  • Lucia F. Dunn
  • Ida A. Mirzaie

Abstract

This research shows that the manufacturing sector contains private information advantages for consumer confidence. It examines the consumer confidence--manufacturing link by comparing the U.S. national-level Index of Consumer Sentiment with identically constructed confidence indices from a key manufacturing state and a nonmanufacturing state. Granger causality analysis shows that the manufacturing state's confidence index leads the national index, whereas the nonmanufacturing state's confidence index lags it. Factors influencing confidence include percentage manufacturing employment, equity markets indicators, and disposable income. Fitting a consumption function to confidence measures for the three confidence indices shows the strongest relationship to be in the manufacturing state. (JEL D12) Copyright 2006, Oxford University Press.

Suggested Citation

  • Lucia F. Dunn & Ida A. Mirzaie, 2006. "Turns in Consumer Confidence: An Information Advantage Linked to Manufacturing," Economic Inquiry, Western Economic Association International, vol. 44(2), pages 343-351, April.
    • Handle: RePEc:oup:ecinqu:v:44:y:2006:i:2:p:343-351
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    File URL: http://hdl.handle.net/10.1093/ei/cbj018
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    Cited by:

    1. Douglas Lamdin, 2008. "Does Consumer Sentiment Foretell Revolving Credit Use?," Journal of Family and Economic Issues, Springer, vol. 29(2), pages 279-288, June.
    2. Aleksejs Melihovs & Svetlana Rusakova, 2005. "Short-Term Forecasting of Economic Development in Latvia Using Business and Consumer Survey Data," Working Papers 2005/04, Latvijas Banka.
    3. Sangyup Choi & Jaehun Jeong & Dohyeon Park & Donghoon Yoo, 2024. "News or animal spirits? Consumer confidence and economic activity: Redux," Journal of Applied Econometrics, John Wiley & Sons, Ltd., vol. 39(5), pages 960-966, August.
    4. Choi, Sangyup & Jeong, Jaehun & Yoo, Donghoon, 2024. "How to interpret consumer confidence shocks? State-level evidence," Economics Letters, Elsevier, vol. 244(C).
    5. Pfajfar, D. & Santoro, E., 2008. "Asymmetries in Inflation Expectation Formation Across Demographic Groups," Cambridge Working Papers in Economics 0824, Faculty of Economics, University of Cambridge.
    6. Tufan Ekici, 2016. "Subjective Financial Distress in the Formation of Consumer Confidence: Evidence from Novel Household Data," Bogazici Journal, Review of Social, Economic and Administrative Studies, Bogazici University, Department of Economics, vol. 30(2), pages 11-36.
    7. Christos Kallandranis & Socrates Karidis, 2014. "Assessing the Effect of the Consumer-Voter Sentiment on Tiebout-Like Migration: The EU 27 Case," Global Economy Journal (GEJ), World Scientific Publishing Co. Pte. Ltd., vol. 14(1), pages 31-55, April.

    More about this item

    JEL classification:

    • D12 - Microeconomics - - Household Behavior - - - Consumer Economics: Empirical Analysis

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