On Apr 12, 2008, at 4:59 PM, Michael Pollak wrote:
> Is confidence a leading, a lagging or a coincident indicator?
Leading, insofar as it's anything. This 1998 study from the NY Fed
<http://www.newyorkfed.org/research/epr/98v04n2/9806bram.pdf>
found the Conference Board's index a decent predictor of consumer spending, and the Michigan measure not so good. The CB survey asks people their impressions of the job market, while Michigan doesn't, and relies more on questions like "Is this a good time to make a big purchase?" Here's a nut graf:
> We find that lagged values of the Conference Board Consumer
> Confidence Index provide information about the future path of
> spending that is not captured by lagged values of the Michigan
> Index of Consumer Sentiment, labor income, stock prices, interest
> rates, or the spending category itself. These results contrast with
> those of other researchers, such as Carroll, Fuhrer, and Wilcox
> (1994), who find that consumer attitudes, as measured by the
> University of Michigan index, contribute little additional
> information.