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The quest for the best consumer confidence indicator - Andreas Jonsson and Staffan Lindén

Andreas Jonsson and Staffan Lindén , European Commission

The quest for the best consumer confidence indicator - Andreas Jonsson and Staffan Lindén pdf(681 kB) Choose translations of the previous link 

Summary for non-specialistspdf(75 kB) Choose translations of the previous link pdf
We search through all possible consumer confidence indicators in order to find the single indicator that has the highest correlation with private consumption growth. Moreover, we contrast this indicator to the Consumer Confidence Indicator used by the European Commission, and some alternative indicators; also in terms of their predictive power of private consumption.

In this context, we test the hypothesis that an indicator based on questions related to the household, rather than the general economy, would prove informative. We find that this "micro" indicator, as well as an optimal indicator that takes into account the specifics of all EU member states, outperform the current Consumer Confidence Indicator. Both these indicators also perform better than an indicator based on the popular factor methodology.
JEL classification:E21, E27, E29

DOI:10.2765/30159
(European Economy. Economic Papers. 372. March 2009. Brussels. PDF. 35pp. Tab. Graph. Ann. Bibliogr. Free.)

KC-AI-09-372-EN-N (online)
ISBN 978-92-79-11183-9 (online)
ISSN 1725-3187

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