Determinants of Consumer Sentiment: Evidence from Household Survey Data
We study the information content of the five components of the University of Michigan¡¯s Index of Consumer Sentiment and identify the main determinants of these measures, using semiparametric ordered choice models and household data from the Surveys of Consumers from January 1978 to September 2012. Our findings suggest that consumers¡¯ own perceptions and expectations, as measured by other survey questions in the Surveys of Consumers, are the most important determinants of the sentiment index. After this set of factors is controlled for, consumers¡¯ demographic characteristics, aggregate macroeconomic variables, and professional forecasts account for little in addition. We also find that the sentiment components about the overall economic conditions are less sensitive to consumers¡¯ own views and characteristics than the components about consumers¡¯ household financial situations. These findings could motivate the use of consumer sentiment measures in a variety of applications, including forecasting consumption expenditures.
|Date of creation:||2013|
|Contact details of provider:|| Postal: Department of Economics, BA 110 University at Albany State University of New York Albany, NY 12222 U.S.A.|
Phone: (518) 442-4735
Fax: (518) 442-4736
|Order Information:|| Postal: Department of Economics, BA 110 University at Albany State University of New York Albany, NY 12222 U.S.A.|
Web: http://www.albany.edu/economics/research/workingp/index.shtml Email:
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Gabler, Siegfried & Laisney, Francois & Lechner, Michael, 1993. "Seminonparametric Estimation of Binary-Choice Models with an Application to Labor-Force Participation," Journal of Business & Economic Statistics, American Statistical Association, vol. 11(1), pages 61-80, January.
- Fan, Chengze Simon & Wong, Phoebe, 1998. "Does consumer sentiment forecast household spending?: The Hong Kong case," Economics Letters, Elsevier, vol. 58(1), pages 77-84, January.
- C. Alan Garner, 1991. "Forecasting consumer spending: should economists pay attention to consumer confidence surveys?," Economic Review, Federal Reserve Bank of Kansas City, issue May, pages 57-71.
- Maddala,G. S., 1986. "Limited-Dependent and Qualitative Variables in Econometrics," Cambridge Books, Cambridge University Press, number 9780521338257, November.
- Breslaw, Jon A. & McIntosh, James, 1998. "Simulated latent variable estimation of models with ordered categorical data," Journal of Econometrics, Elsevier, vol. 87(1), pages 25-47, August.
- Jason Bram & Sydney Ludvigson, 1998.
"Does consumer confidence forecast household expenditure? a sentiment index horse race,"
Economic Policy Review,
Federal Reserve Bank of New York, issue Jun, pages 59-78.
- Jason Bram & Sydney Ludvigson, 1997. "Does consumer confidence forecast household expenditure?: A sentiment index horse race," Research Paper 9708, Federal Reserve Bank of New York.
- Berg Lennart & Bergström Reinhold, 1996. "Consumer Confidence and Consumption in Sweden," Working Paper Series 1996:7, Uppsala University, Department of Economics.
- Melenberg, B. & van Soest, A.H.O., 1996. "Measuring the costs of children : Parametric and semiparametric estimators," Other publications TiSEM 1227b8b2-0575-4b5d-9bac-7, Tilburg University, School of Economics and Management.