A Comparison of Consumer and Retail Trade Confidence Indicators for Predicting Household Expenditure in the U.K.

The objective of this paper is to compare the usefulness of two confidence indicators for the purpose of predicting spending by households in the UK. Concern is with six different types of consumption expenditure. In contrast to earlier studies, conclusions are founded upon a post-sample, as well as a within-sample, analysis. The fundamental result which is obtained is that the GfK measure of consumer confidence generally outperforms the European Commission’s indicator of confidence within the retail sector.