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Consumer confidence as a leading indicator for gross domestic product growth

by Melito, Jacob P.

Abstract

The Conference Board’s Consumer Confidence Index consistently fluctuates with GDP growth. While many believe that this correlation is caused by consumer’s reactions to economic changes, this paper argues that economic changes are reacting to consumer’s attitudes in the form of GDP growth. By using both The Conference Board’s Consumer Confidence Index and The University of Michigan’s Index of Consumer Sentiment, this study is able to compare and distinguish which index has better forecasting capabilities. Granger-causality regressions on a 4 year time-series showed statistical evidence that The Consumer Confidence Index was capable of determining GDP growth one and two years in advance while GDP growth does not appear to influence consumer confidence. In accordance with previous research, The Index of Consumer Sentiment does not appear to possess any forecasting power for GDP growth.

Note

Includes bibliographical references.

Title self-submitted as: Consumer confidence as a leading indicator for gross domestric product growth

Administrative Notes

Title self-submitted as: Consumer confidence as a leading indicator for gross domestric product growth

Copyright
Copyright restrictions apply.
Publisher
Colorado College
PID
coccc:5972
Digital Origin
born digital
Extent
58 pages :. illustrations (some color)
Thesis
Senior Thesis -- Colorado College
Thesis Advisor
Redmount, Esther
Department/Program
Economics and Business
Degree Name
bachelor
Degree Type
Bachelor of Arts
Degree Grantor
Colorado College
Date Issued
2012