The indexes of consumer sentiment and confidence: Leading or misleading guides to future buyer behavior

Huth, William L.; Eppright, David R.; Taube, Paul M.

doi:10.1016/0148-2963(94)90004-3

Cited by 53 publications

(40 citation statements)

References 12 publications

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“…On the one hand, Desroches and Gosselin (2002) and Roberts and Simon (2001) found that sentiment indicators contain little information to forecast consumption, even if Desroches and Gosselin (2002) stressed the importance of the consumer sentiment in times of high economic and political uncertainty. On the other hand, Batchelor and Dua (1998), Carroll, Fuhrer and Wilcox (1994), Easaw and Heravi (2004), Eppright, Arguea and Huth (1998), Huth, Eppright and Taube (1994), Kumar et al (1995) and Souleles (2004) all found the consumer sentiment index to be a useful leading indicator in predicting aggregate consumer expenditures. In this paper we want to study the term structure of the consumer sentiment index.…”

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confidence: 99%

Consumer sentiment and consumer spending: decomposing the Granger causal relationship in the time domain

2007

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It is often believed that the consumer sentiment index has predictive power for future consumption levels. While Granger causality tests have already been used to test for this, no attempt has been made yet to quantify the predictive power of the consumer sentiment index over different time horizons. In this paper, we decompose the Granger causality at different time lags, by looking at a sequence of nested prediction models.Since the consumer sentiment index turns out to be cointegrated with real consumption, we resort to Error Correcting Models. Four consumption series are studied, namely total real consumption, real consumption of durables, nondurables and services. Among other findings, we show that the consumer sentiment index Granger causes future consumption with an average time lag of four to five months. Furthermore, it is found that the consumer sentiment index has more incremental predictive power for consumption of services than for consumption of durables or nondurables, and that the index is not only useful as a predictor at the very short term, but keeps predictive power at larger time horizons.

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confidence: 99%

Consumer sentiment and consumer spending: decomposing the Granger causal relationship in the time domain

2007

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“…As Katona (1975) and others (Blanchard 1993;Hall 1993;Huth, Eppright, and Taube 1994;Eppright, Arguea, and Huth 1998;Adrangi and Macri 2011) have noted, this is precisely the type of spending where sentiment should matter most; these are the very things we can hold off buying when times are bad. Consumer sentiment should thus act to restrain this spending when we are pessimistic.…”

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confidence: 99%

The Usefulness of Consumer Sentiment: Assessing Construct and Measurement

Kellstedt

Linn

Hannah

2015

Public Opinion Quarterly

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“…Lastly, the study employs regression models to predict demand for cars. Huth et al (1994) commented that the methodology is not well suited to the dynamic movement of consumer buying confidence or sentiment and consumer purchase variables over time. He suggested to use vector autoregression time-series techniques to determine whether one variable leads, lags, or moves contemporaneously with another variable.…”

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confidence: 99%

“…Some studies (Hymans (1970), Burch and Gordon 1984)) found that the ICS had little predictive value in explaining consumer durable purchases while other studies (Juster and Watchel (1972), Throop (1991), and Huth et. al.…”

Section: The Study Of Demand For Durable Goods and Carsmentioning

confidence: 99%

The Demand for New Cars and the Index of Consumer Sentiment

Utama¹

2003

Makara Hubs-Asia

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AbstrakIndeks Sentimen Konsumen (ISK) banyak digunakan sebagai pengukur keyakinan pembelian di masa mendatang untuk memprediksi perilaku pembelian agregat di masa datang. Studi ini secara empiris membandingkan antara dua model proyeksi : model pengharapan (the expectation model) yang memasukkan ISK sebagai variabel penjelasan dan model tradisional (the traditional model) yang tidak memasukkan ISK. Kedua modal tersebut digunakan untuk mengestimasi permintaan agregat atas mobil baru di Amerika sejak 1976 sampai 1984. Hasil studi mengindikasikan bahwa ISK memiliki hubungan positif dengan penjualan mobil baru. Namun, berdasarkan kemungkinan kriteria dominan (the likelihood dominance criterion), model tradisional lebih baik dibandingkan model pengharapan. Selain itu, kemampuan memprediksi dari model pengharapan sedikit lebih rendah dibandingkan model tradisional. AbstractThe index of consumer sentiment (ICS) has been widely employed as a proxy for future buying confidence to predict future aggregate buying behavior. This study empirically compares two forecast models: the expectation model that includes the ICS as an explanatory variable and the traditional model that does not include the ICS. The models are employed to estimate the aggregate demand for new cars in the U.S. from 1976 to 1984. The results indicate that the ICS has a positive relation with new car sales. On the basis of the likelihood dominance criterion, however, the traditional model is preferred to the expectation model. Furthermore, the forecast ability of the expectation model is slightly inferior to the traditional model

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The indexes of consumer sentiment and confidence: Leading or misleading guides to future buyer behavior

Cited by 53 publications

References 12 publications

Consumer sentiment and consumer spending: decomposing the Granger causal relationship in the time domain

Consumer sentiment and consumer spending: decomposing the Granger causal relationship in the time domain

The Usefulness of Consumer Sentiment: Assessing Construct and Measurement

The Demand for New Cars and the Index of Consumer Sentiment

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