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Heading Towards the New Great Recession? A Confidence Research Perspective

Author

Listed:
  • Matosec, Marina

    (Faculty of Economics & Business, University of Zagreb, Croatia)

Abstract

This paper’s objective is to further stimulate economists’ motivation to carefully consider a class of economic sentiment indices which measure people’s beliefs, perceptions and expectations regarding the economy. As the acknowledged leading indicators of economic activity, they have the potential to timely point to the upcoming economic distress. However, given their potential, they are still relatively underused. The from-scratch empirical analysis in this paper detects the recent unfavourable developments in the key sentiment indices, particularly the ones measuring the confidence of consumers. Considering consumer sentiment indicators, the situation in the US and the European countries now seems even worse than during the Great Recession while the perceived uncertainty is building up. As the origin of the new crisis might lie in the sector of consumers – the drivers of final aggregate consumption – policymakers should take their sudden confidence drop seriously and accordingly develop near-future strategies to timely overturn these adverse trends.

Suggested Citation

  • Matosec, Marina, 2022. "Heading Towards the New Great Recession? A Confidence Research Perspective," Journal of Economic and Social Development, Clinical Journals Press, vol. 9(02), pages 01-11, September.
    • Handle: RePEc:ris:joeasd:0051
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    References listed on IDEAS

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    1. Carroll, Christopher D & Fuhrer, Jeffrey C & Wilcox, David W, 1994. "Does Consumer Sentiment Forecast Household Spending? If So, Why?," American Economic Review, American Economic Association, vol. 84(5), pages 1397-1408, December.
    2. Jason Bram & Sydney C. Ludvigson, 1998. "Does consumer confidence forecast household expenditure? a sentiment index horse race," Economic Policy Review, Federal Reserve Bank of New York, vol. 4(Jun), pages 59-78.
    3. Bachmann, Rüdiger & Sims, Eric R., 2012. "Confidence and the transmission of government spending shocks," Journal of Monetary Economics, Elsevier, vol. 59(3), pages 235-249.
    4. Roberto Astolfi & Michela Gamba & Emmanuelle Guidetti & Pierre-Alain Pionnier, 2016. "The use of short-term indicators and survey data for predicting turning points in economic activity: A performance analysis of the OECD system of CLIs during the Great Recession," OECD Statistics Working Papers 2016/8, OECD Publishing.
    Full references (including those not matched with items on IDEAS)

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    More about this item

    Keywords

    Business and Consumer Survey; economic sentiment; Consumer Confidence Indicator; recession;
    All these keywords.

    JEL classification:

    • A11 - General Economics and Teaching - - General Economics - - - Role of Economics; Role of Economists

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