Consumer Confidence Index Research Articles

Forecasting changes in consumer behavior in conditions of economic crisis

Subject. The article addresses the issue of forecasting changes in consumer behavior patterns in the medium and long term. Objectives. The focus is on consumer behavior prediction to identify potential growth points for small and medium-sized businesses in the field of trade and services. Methods. The methodological basis of the study is behavioral economics. The information base draws on analytical reports of Cerulli Associates, Profi Online Research, PricewaterhouseCoopers, Euromonitor International, and Ipsos research company, which developed and uses in its analysis a calculation methodology for the Global Consumer Confidence Index. Results. We analyzed the main trends of consumer behavior in 2022 in Russia in the context of tougher sanctions, global supply disruptions, and other crisis phenomena, from the perspective of existing knowledge about sustainable forms of Russian consumers’ reaction to crisis events in the economy. The paper highlights a decrease in loyalty to brands, expansion of online commerce to people over the age of 60, reduced demand for eco-products, and enhanced financial literacy, which is accompanied by an increase in demands for a fair price-quality ratio, as the key changes in consumer behavior that determine opportunities for businesses. Conclusions. Crises seriously affect the time frames of consumer planning. During the crisis, the time frames are reduced and blurred, and now consumers proceed from even greater uncertainty.

US consumers' confidence and responses to COVID-19 shock

PurposeThis research's main objective is to investigate the relationship between consumption expenditure and consumer confidence in the USA and to study their effects on US economic revivalism during and after the coronavirus disease 2019 (COVID-19) shock.Design/methodology/approachThe authors use Michigan's monthly Consumer Sentiment Index and its five components from January 1978 to April 2020. The study is unique in quantifying the potential variations in US consumer confidence due to COVID-19 under different scenarios, by providing a projection until December 2021. It also estimates the time needed for recovery and offers guidance to policymakers on ways to contain the negative impacts of COVID-19 on the economy by restoring consumer confidence.FindingsAll scenarios show a gradual recovery of consumer confidence and consumption expenditure. This study recommends expansionary policies to encourage consumption expenditure to generate additional demand and boost economic growth and job creation.Practical implicationsThough this study is limited to the US consumer confidence index, it offers significant implications for marketers, customers and policymakers of other developed economies. The authors recommend expansionary economic policies to boost consumer confidence, raise economic growth and result in job creation.Originality/valueThe study is unique in quantifying the potential variations in US consumer confidence due to COVID-19 under different scenarios; by providing a projection until December 2021. It also estimates the time needed for recovery and guidance for policymakers on ways to contain the COVID-19 shock negative impacts on the economy by restoring consumer confidence.

Overreaction, Investor Sentiment and Market Sentiment of COVID-19

This study examines the impact of investor sentiment and market sentiment on overreaction in Europe and USA markets before and during COVID-19. The investor sentiment is calculated by the standard deviation, realized volatility, Parkinson’s estimator and Garman and Klass’s estimator. The market sentiment is measured by Business Confidence Index, Consumer Confidence Index, Labour Force Survey, Leading Index and Monetary Aggregates. The results of this study show that investor and market sentiments are correlated to stock return before COVID-19. Nonetheless, realized volatility is the only investor sentiment that is significant with the emergence of COVID-19. It shows that investors rely on the previous day’s stock prices to trade under market uncertainty. Market sentiment is observed to be insignificant in the pandemic. Furthermore, the existence of overreaction is detected in European portfolios but no evidence of overreaction is shown in the USA during pre-COVID-19. Surprisingly, overreaction is observed in Europe and USA markets in the pandemic. The USA market has a higher overreaction tendency than Europe. The results of this study assist academicians, practitioners and investors in understanding and creating awareness of the existence of market overreaction and its determinants before and during COVID-19.

The impact of oil supply shocks on real economic activity: new evidence based on the proxy SVARs

ABSTRACT The existing literature on the impact of oil supply shocks on real economic activity after the mid-1980s still fails to reach an agreement. This may be partly due to different identification assumptions and model specifications corresponding to the oil supply shock, and partly due to the oil supply shock identified previously is endogenous to real economic activity. In this paper, based on the proxy structural vector autoregressions (SAVRs), we identify an oil supply shock that is exogenous to real economic activity, and then study the impact of this shock on U.S. real economic activity. We find exogenous oil supply shocks have a very large and persistent impact on U.S. real economic activity after the mid-1980s. Besides, several new possible transmission channels through which exogenous oil supply shocks can influence U.S. real GDP are detected. Specifically, unfavorable exogenous oil supply shocks can lower the consumer sentiment index (CSI) and consumer confidence index (CCI), decrease real net exports of goods and services (NEGS) through the terms of trade (TOT) effect, and reduce real government consumption expenditures and gross investment of state and local (GCEGISL), thus leading to a decline in real GDP. These newly detected transmission channels are very important for policymakers.

THE RELATIONSHIP BETWEEN CREDIT CARD EXPENDITURES, CONSUMER CONFIDENCE AND CONSUMERS' SAVING TENDENCIES

The decisions of consumers in the economy have a decisive role in the understanding of economic indicators and planning the future. Consumer decisions are affected by many different elements. Foremost among them among are the consumer confidence index, which measures the tendency of consumers to spend or save, and credit card expenditures, which have a significant share in the consumption structure. Although the decisions taken by the households vary from time to time, it is thought that the spending of consumers with credit cards has increased especially during the COVID 19 period, but some consumers have a precautionary behavior and tend to save. Therefore, behavior of the households can be forecasted if the relationship between the expectations of consumers, saving trends and expenditure trends is determined. For this purpose, the relationship between credit card expenditures, consumer confidence and consumers' saving tendencies are investigated for the period 2014: 03-2021: 12. The relationship between the variables for this period is analyzed with ARDL model. As a result of the applied analyzes, it has been found that there is a statistically significant cointegration relationship between variables. In the long term, credit card expenditures have a negative and significant effect on the consumer confidence index and the tendency of the savings is has no significant effect. The short-term relationship between variables is analyzed with the error correction model (ECM). As a result of the analyzes, it was found that the savings tendency has a significant impact on the consumer confidence index, and credit card expenditures have positive but low-effect on the consumer confidence index for its lagged values.

THE ECONOMIC EFFECTS OF COVID-19 MITIGATION POLICIES ON UNEMPLOYMENT AND ECONOMIC POLICY UNCERTAINTY

This paper examines the effects of government COVID-19 mitigation strategies and Economic Policy Uncertainty (EPU) on unemployment-rate over the period November 2019 to April 2021 for the 16 most severely COVID-19 affected countries. Our specific objectives are threefold: first, to examine the dynamic relationship between EPU and unemployment-rate; second, to analyze the extent to which government’s COVID-19 mitigation response affects the unemployment-rate; and third, to examine indirectly the effects of government economic policies on the unemployment-rate through market indicators, such as the business and consumer confidence indices. We find that EPU increases fluctuations in unemployment for the COVID-19 affected countries, while governments’ vaccination drive significantly reduces it. Increases in government stringency aggravate unemployment in the informal sectors and enhances labor inequality.

Forecasting consumption using the consumer confidence index in Russia

The paper considers short-term forecasting of household final consumption expenditures using the consumer confidence index in Russia. The article presents a comparative analysis of consumption forecasting approaches using a leading indicator in various countries. The author makes consumption nowcasts based on quarterly data for the period from 2000 to 2021. Unlike most studies based on seasonally adjusted time series, the current study uses seasonally differentiated time series. To determine the predictive power of the index, the author builds several models which include in turn the consumer confidence index, index lags, and consumption lags. The quality comparison of different specifications with the root mean squared forecast error demonstrates that the inclusion of the consumer confidence index in the model increases the accuracy of both out-of-sample and in-sample forecasts. The conducted statistical tests confirm that the inclusion of a leading indicator in the model improves the quality of forecasts.

Chinese consumer confidence: A catalyst for the outbound tourism expenditure?

This study performs the bootstrap full- and sub-sample rolling-window Granger causality tests, in order to investigate the time-varying causal relationship between the consumer confidence index (CCI) and the outbound tourism expenditure (OTM) in China. For this purpose, it introduces the variable of consumer confidence as a subjective psychological perception variable into the gravity model and explores its impact on the outbound travel. The results reveal that CCI tends to exert positive impacts on the OTM in most subsamples. That is to say that the Chinese consumer confidence can be considered as a catalyst for the OTM. However, the impact tends to be negative during times such as the global financial crisis, caused by the appreciation in the renminbi. In turn, OTM does not affect CCI. This suggests that the only change of private expenditure on outbound tourism cannot alter consumer confidence regarding the current economic and income situation. These findings compel the foreign tourism authorities to take CCI into account, especially when predicating the tourism arrivals from China, and hence plan their tourism strategy accordingly. Also, Chinese travel agencies should ideally take notice of the CCI in order to plan their international tour packages.

Impact of Covid-19 Pandemic on Indonesian Consumer and Business Confidence Indicator

Our study has two main aims, which are to utilize the pandemic of coronavirus as a subject of interest. First, this paper purposes of explaining the impact of the coronavirus rate, including the new cases and mortality rate, on consumer sentiment using a proxy of consumer confidence indicators. By the first aim, this paper captures the impact of the pandemic on the consumer side. Second, this paper also aims to explain the impact of coronavirus figures, including the new cases and mortality rate, on the business sentiment using a proxy of business confidence indicators. By the second aim, this paper seizes the impact of the pandemic on the producer side. There is an abundance of international studies that have similar research aims to our study, i.e., Teresine et al. (2021), Chong et al. (2021), Barro et al. (2020), and Baker et al. (2020). Most of these studies emphasize their attention to COVID-19 cases from international cases, i.e., the United States, the Eurozone, and the People's Republic of China. However, a study by Chong and colleagues assessed the impact of the coronavirus on ASEAN countries descriptively. Their studies separately analyzed several Southeast Asian country's economic figures for the first two quarters in 2020. Our result indicates that the impact of COVID-19 on both indicators, consumer and business, is different. This study only finds statistically total death confirmed cases affect business confidence. Our study corroborates with findings from Teresina et al., whose results argue that the spread of pandemics did not affect the consumer confidence index in the Eurozone. Although using different business sentiments, our study finds a similar pattern: business sentiment reacts to increasing total cases confirmed. We suggest our readers have to take our findings with a grain of salt because of the limitation of observations.

Determinants of Consumer Confidence Index to Predict the Economy in Indonesia

Psychological factors play an important role in the economy and in predicting the state of the economy. One of the measurement tools of these factors is the consumer confidence index (CCI), which has recently received much attention from both researchers and policymakers. For years, Bank Indonesia has conducted surveys through face-to-face and phone call interviews with several respondents who were used as research samples to control information on economic fundamentals. The purpose of this study is to explore a new variable that is thought to affect the consumer confidence index in Indonesia and explain the influence between variables from the results of secondary data processing. This study used the multivariate regression model and t-test equations with a significance level of 5%. The variables used in this study are the foreign exchange rate, unemployment rate, corruption control index, inflation rate, and consumer confidence index from January 2015 to December 2019 in Indonesia. The results conclude that Indonesia's consumer confidence index is influenced by the inflation rate, the unemployment rate, the exchange rate, and the conditions for controlling corruption. The multivariate regression model generated from this study is a novelty in research on the consumer confidence index. This study also provides an alternative way for Bank Indonesia to evaluate the consumer confidence index, which previously used the face-to-face interview method, and the phone survey turned into using secondary data source. The use of secondary data for the multivariate regression model will accelerate policy making and is more efficient in terms of costs.

Consumer Confidence Index as a Determinant of the Crime Level in Russia

Consumer Confidence Index as a Determinant of the Crime Level in Russia

Daily news sentiment and monthly surveys: A mixed-frequency dynamic factor model for nowcasting consumer confidence

Policymakers, firms, and investors closely monitor traditional survey-based consumer confidence indicators and treat them as an important piece of economic information. To obtain a daily nowcast of monthly consumer confidence, we introduce a latent factor model for the vector of monthly survey-based consumer confidence and daily sentiment embedded in economic media news articles. The proposed mixed-frequency dynamic factor model uses a Toeplitz correlation matrix to account for the serial correlation in the high-frequency sentiment measurement errors. We find significant accuracy gains in nowcasting survey-based Belgian consumer confidence with economic media news sentiment.

The Impact of Economic Policy Uncertainty on Consumer Confidence in Pakistan

This study examines the impact of Economic Policy Uncertainty (EPU) on the consumer confidence index (CCI) in Pakistan. Using a sample from the start of 2012 up to February 2020, a vector error-correction model is used to gauge the impact of EPU on CCI. Our results show that a shock to EPU in Pakistan affects CCI negatively and significantly. The shock persists for a span of more than 20 forecast horizons, informing economic policy makers in Pakistan that sudden changes in the stance without proper communication can deteriorate consumer confidence. This is important as consumer confidence in Pakistan accounts for not only the current economic situation, but expected changes in key macroeconomic variables which is usually a key consideration when forward-looking policies are devised. Our results remain robust to alternate Choleski specifications and lag lengths in the model.

Investor sentiment, economic uncertainty, and monetary policy in Brazil,

ABSTRACT The aim of this study is to analyze how economic uncertainty and monetary policy affect investor sentiment in Brazil. Investor sentiment is an important element in the finance, economics, and accounting literature and its impact on financial markets is widely documented. However, understanding the variables that affect it remains an important challenge, and this research seeks to explore this gap within the Brazilian context. The study provides initial evidence regarding the impact of economic uncertainty and monetary policy on investor sentiment in Brazil. The findings documented here provide theoretical, managerial, and social contributions, with a possible impact on the areas of finance, economics, and accounting. Monthly data were used relating to four mechanisms of transmission of economic uncertainty and of monetary policy (interest rate, exchange rate, inflation rate, economic uncertainty index) and to the consumer confidence index as a proxy for investor sentiment (covering the period from January of 2006 to March of 2020). An autoregressive distributed lag model was estimated to capture short- and long-term relationships between the variables. The results indicate that investor sentiment is affected by economic uncertainty and by the main mechanisms of transmission of monetary policy to different extents and in the different time horizons. The evidence suggests that investors, policymakers, and monetary authorities should consider sentiment as a signal, whether for altering investment portfolios or for anticipating economic trends. It also provides support for focusing on economic and monetary policy in the National Financial Education Strategy (Estratégia Nacional de Educação Financeira - ENEF) recently adopted in Brazil

Effect of Consumer Confidence Index, Interest Rate, Stock Market Composite Index, and Inflation on the Net Asset Value of Indonesian Mutual Funds

The growth of the mutual fund industry will continue to grow positively in line with the condition of the national economy, which is starting to recover from the crisis caused by the pandemic. It is essential to study the factors that influence this phenomenal growth to carry out risk mitigation. This research focuses on the factors that affect the NAV fluctuation by considering macroeconomic dimensions such as the consumer confidence index, interest rates, the stock market composite indexes, and inflation as independent variables. The study uses monthly time series data with the period from January 2013 to December 2020. The VAR model performed in the study proved that only the Composite Stock Price Index variable in the previous month significantly affects the Net Asset Value prices in the short- term. The impulse response function also confirms a strong relationship. The Composite Stock Price Index can influence the fluctuations to the Net Asset Value of Indonesia mutual funds. The composite stock price index can be used as a particular consideration when assessing the Indonesian mutual funds. Keywords: Mutual Funds; Consumer Confidence Index; Interest rate; stock market composite indexes, mutual funds DOI: 10.7176/EJBM/13-21-01 Publication date: November 30 th 2021

Optimistic and pessimistic economic sentiments and US Dollar exchange rate

This study investigates the affiliation of various proxies of economic sentiments and the US Dollar exchange rate, mainly focusing on the real effective exchange rate of USD pairing with three other major currencies (USDEUR, USDGBP, and USDCAD). The study has employed Google Trends data of economy optimistic and pessimistic sentiments index and survey-based economy sentiments data on monthly basis from January 2004 to December 2018. The study engaged Ordinary Least Squares (OLS) and Auto-Regressive Distributed Lag (ARDL) estimation techniques to evaluate the short-run and long-run effects of economy-related sentiments and macroeconomic variables on the exchange rate. The results from the study found that Economy Optimistic Sentiments Index (EOSI) and Economy Pessimistic Sentiments Index (EPSI) appreciate and depreciate the US Dollar exchange rate in the short-run, respectively. Our sentiment measures are robust to survey-based Michigan Consumer Sentiment Index (MSCI), Consumer Confidence Index (CCI), and various macroeconomic factors. The MSCI and CCI sentiments show a long-term impact on the foreign exchange market. This study implies that economic sentiments play a vital role in the foreign exchange market and it is essential to consider behavioral aspects when modeling the exchange rate movements.

TÜRKİYE PERAKENDE SEKTÖRÜNDE SATIŞ HACMİ İLE TÜKETİCİ GÜVEN İNDEKSİ ARASINDAKİ İLİŞKİ

In this study, the relationship between retail sales volume index and consumer confidence index has been examined. The data is for the period 2010Q1-2015Q4. While retail sales volume index is used as the dependent variable in the analysis, independent variables such as consumer confidence index, real GDP and consumer price indices are used. ADF (Augmented Dickey-Fuller) method was applied to determine the stationary state of the series. In addition, an ARDL test was performed for the short and long term applications of the series. According to the research findings obtained, we can see that consumer confidence index and consumer price index variables affect the retail sales volume index variable positively and significantly in the long run; however, it was determined that the real GDP variable positively but did not significantly affect the retail sales volume.

The impact of economic uncertainty and financial stress on consumer confidence: the case of Japan

PurposeThis study explores the response of consumer confidence in policy uncertainty in the Japanese context. The study also considers the dynamism of stock market behavior and financial stress and its impact on consumer confidence, which has remained unaddressed in the literature. The role of these control variables has important implications for policy discussions, particularly when other countries can learn from Japanese experiences.Design/methodology/approachThe nonlinear autoregressive distributed lag model postulated by Shin et al. (2014) was used for studying the asymmetric response of consumer confidence to policy uncertainty. This method has improved estimates compared to traditional linear cointegration methods.FindingsThe findings confirm the asymmetric impact of policy uncertainty on the consumer confidence index in Japan. The impact of the rise in policy uncertainty is greater than that of a fall in asymmetry on consumer confidence in Japan. Furthermore, the Wald test confirmed asymmetric behavior.Originality/valueThe contribution of this study is threefold. First, this study contributes to the extant literature by analyzing the asymmetric response of consumer confidence to policy uncertainty, controlling for both the financial stress and stock price indices. Second, to test the robustness of the exercise, the study utilized different frequencies of observations. Third, this study is the first to utilize the concept of Arbatli et al. (2017) to formulate a combined index of uncertainty based on economic policy uncertainty index, along with uncertainty indices such as fiscal, monetary, trade and exchange rate policies to study the overall impact of policy uncertainty.

An Analysis of Inter-Relationship among Commodities, Stock and Economic Indices

This research will concentrate primarily on commodity relationships, mainly, prices of oil (OP) and gold (GP), US stock market (S&P500), consumer confidence index (CCI), the US Dollar index (USDX), and the industrial production (IP). The purpose of the analysis is to study the dynamic interconnection between OP, USDX, CCI, GP, IP, and S&P500, by estimating the Vector Auto Regression (VAR) model. OP, CCI, GP, USDX, S&P500, and IP are the different variables used in this paper. Using monthly data from January 1971 to May 2020, this study applies the Granger causality test, Variance Decomposition (VDC) analysis, and Impulse Response Function (IRF). It can be inferred from the results that USDX has a significant relationship with GP and has a causal impact on GP. Industrial Production has also shown a significant relationship with S&P500 and has a causal impact on S&P500. The result also suggested that CCI and S&P500 share a unidirectional relationship; the volatility in CCI in the short run is due to the S&P500. Also, the variables do not have any other significant relationship. The findings also highlighted that USDX directly affected GP negatively. Industrial production directly impacted S&P500 in the short run, while a positive relationship is shared between CCI and S&P 500.

Investor sentiment and stock returns: Global evidence

We assess the impact of investor sentiment on future stock returns in 50 global stock markets. Using the consumer confidence index (CCI) as the sentiment proxy, we document a negative relationship between investor sentiment and future stock returns at the global level. While the separation between developed and emerging markets does not disrupt the negative pattern, investor sentiment has a more instant impact in emerging markets, but a more enduring impact in developed markets. Individual stock markets reveal heterogeneity in the sentiment-return relationship. This heterogeneity can be explained by cross-market differences in culture and institutions, along with intelligence and education, to varying degrees influenced by the extent of individual investor market participation. • We assess the sentiment impact on future stock returns in 50 global stock markets. • A negative sentiment-return relationship is revealed at the global level. • Sentiment has a more instant (enduring) impact in emerging (developed) markets. • Individual stock markets show differences in the sentiment-return relationship. • Culture, institutions, intelligence/education and market participation play a role.