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Do Consumer Confidence Indexes Help Forecast Consumer Spending in Real Time?

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  • Croushore, Dean

Abstract

Could a researcher or policy analyst use data reported from surveys of consumer confidence to improve forecasts of consumer spending? This issue has been examined in the literature previously, which reached the conclusion that consumer confidence helped improve the forecasts slightly. But that research was based on final, revised data and thus did not use the data that would have been available to forecasters in real time. This paper remedies that shortcoming, using the Real-Time Data Set for Macroeconomists to analyze the quality of forecasts made with indexes of consumer confidence. The main finding is that the indexes of consumer confidence are not of significant value in forecasting consumer spending. In fact, in some cases, they make the forecasts significantly worse.

Suggested Citation

  • Croushore, Dean, 2004. "Do Consumer Confidence Indexes Help Forecast Consumer Spending in Real Time?," Discussion Paper Series 1: Economic Studies 2004,27, Deutsche Bundesbank.
    • Handle: RePEc:zbw:bubdp1:2293
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    References listed on IDEAS

    as
    1. Dean Croushore, 1998. "Evaluating inflation forecasts," Working Papers 98-14, Federal Reserve Bank of Philadelphia.
    2. Eric M. Leeper, 1992. "Consumer attitudes: king for a day," Economic Review, Federal Reserve Bank of Atlanta, issue Jul, pages 1-15.
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    JEL classification:

    • E27 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Forecasting and Simulation: Models and Applications

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