The Forecasting Accuracy of Consumer Attitude Data

Abstract

Abstract This note evaluates the forecasting accuracy of the index of consumer sentiment constructed by the Michigan Survey Research Center. For the most part, other analyses have focused on the interpretation which should be given to an attitude variable or broadly described movements of the index of consumer sentiment in the vicinity of cyclical turning points. None of the studies have compared the accuracy of equations in which the attitude index is an independent variable against naive forecasting models. Thus, Eva Mueller [9] examined whether the index of consumer sentiment modified consumer responses to financial variables. Most of her equations explained variations in durable goods expenditures or automobile sales with the index and different forms of income, liquid asset, and unemployment variables. Since Mueller was not primarily interested in constructing a forecasting equation, her analysis of a large number of equations emphasized the interpretation and the significance of the index. F. Gerard...