Consumer Attitudes and Their Forecasting Power for Consumer Spending

The University of Michigan's Surveys of Consumers is summarized with principal components of consumer attitudes with respect to income and wealth, prices, and interest rates and credit availability. These summary measures contain information beyond that captured by the Index of Consumer Sentime...

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Bibliographic Details
Published in:Journal of money, credit and banking credit and banking, 2017-08, Vol.49 (5), p.1031-1058
Main Authors: BARNES, MICHELLE L., OLIVEI, GIOVANNI P.
Format: Article
Language:English
Subjects:
Attitude surveys
Consumer attitudes
Consumer spending
Consumption
E21
E27
E52
E66
Economic models
Forecasting
Forecasting techniques
Interest rates
Polls & surveys
Power
Predictions
Prices
principal components
Surveys of Consumers
Wealth
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Summary:The University of Michigan's Surveys of Consumers is summarized with principal components of consumer attitudes with respect to income and wealth, prices, and interest rates and credit availability. These summary measures contain information beyond that captured by the Index of Consumer Sentiment. The summary measures have forecasting power for aggregate consumption behavior, even when controlling for economic fundamentals. These measures also help to improve significantly upon Survey of Professional Forecasters, Blue Chip Consensus, and Federal Reserve Board's forecasts of consumption and other real activity measures, consistent with their predictive ability conditioned upon a broader set of fundamentals and forecasters' judgment.
ISSN:0022-2879
1538-4616
DOI:10.1111/jmcb.12404