Does consumer sentiment accurately forecast UK household consumption? Are there any comparisons to be made with the US?

Easaw, Joshy ORCID: https://orcid.org/0000-0003-3476-4300, Garratt, Dean and Heravi, Saeed ORCID: https://orcid.org/0000-0002-0198-764X 2005. Does consumer sentiment accurately forecast UK household consumption? Are there any comparisons to be made with the US? Journal of Macroeconomics 27 (3) , pp. 517-532. 10.1016/j.jmacro.2004.03.001

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Abstract

This paper investigates how well survey data depicting consumer sentiment forecasts household’s consumption behavior for the UK. We consider whether consumer sentiment is able to predict the growth of household’s consumption, in addition to the growth of labor income. The empirical analysis finds that Consumer Confidence Indices (CCI) does predict the household’s consumption of durable goods. We also draw comparisons with recent analysis for the US. In addition, we analyze whether both the UK and US CCI are accurate and useful predictors of household’s consumption growth using directional analysis. We find that the UK confidence indicators predict better the US.

Item Type:	Article
Date Type:	Publication
Status:	Published
Schools:	Business (Including Economics)
Subjects:	H Social Sciences > H Social Sciences (General) H Social Sciences > HB Economic Theory H Social Sciences > HD Industries. Land use. Labor H Social Sciences > HF Commerce
Uncontrolled Keywords:	Consumer sentiment; Forecastability; Household consumption behavior; Instrumental variables; Directional analysis
Publisher:	Elsevier
ISSN:	0164-0704
Last Modified:	21 Oct 2022 10:23
URI:	https://orca.cardiff.ac.uk/id/eprint/40038

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