Consumer confidence indices and stock markets’ meltdowns

Elena Ferrer, Julie Salaber, Anna Zalewska

Research output: Contribution to journalArticle

  • 2 Citations

Abstract

Consumer confidence indices (CCIs) are a closely monitored barometer of countries’ economic health, and an informative forecasting tool. Using European and US data, we provide a case study of the two recent stock market meltdowns (the post-dotcom bubble correction of 2000-2002 and the 2007-2009 decline at the beginning of the financial crisis) to contribute to the discussion on their appropriateness as proxies for stock markets’ investor sentiment. Investor sentiment should positively covary with stock market movements (DeLong et al., 1990), however, we find that the CCI-stock market relationship is not universally positive. We also do not find support for the information effect documented in previous literature, but identify a more subtle relationship between consumer expectations about future household finances and stock market fluctuations.
LanguageEnglish
Pages195-220
JournalThe European Journal of Finance
Volume22
Issue number3
Early online date9 Oct 2014
DOIs
StatusPublished - 2016

Fingerprint

Consumer confidence
Stock market
Investor sentiment
Health economics
Bubble
Household finance
Information effects
Appropriateness
Consumer expectations
Stock market index
Financial crisis
Fluctuations

Cite this

Consumer confidence indices and stock markets’ meltdowns. / Ferrer, Elena; Salaber, Julie; Zalewska, Anna.

In: The European Journal of Finance, Vol. 22, No. 3, 2016, p. 195-220.

Research output: Contribution to journalArticle

Ferrer, Elena ; Salaber, Julie ; Zalewska, Anna. / Consumer confidence indices and stock markets’ meltdowns. In: The European Journal of Finance. 2016 ; Vol. 22, No. 3. pp. 195-220
@article{f5f48bdf9489460ca90e8cbc975c2f9a,
title = "Consumer confidence indices and stock markets’ meltdowns",
abstract = "Consumer confidence indices (CCIs) are a closely monitored barometer of countries’ economic health, and an informative forecasting tool. Using European and US data, we provide a case study of the two recent stock market meltdowns (the post-dotcom bubble correction of 2000-2002 and the 2007-2009 decline at the beginning of the financial crisis) to contribute to the discussion on their appropriateness as proxies for stock markets’ investor sentiment. Investor sentiment should positively covary with stock market movements (DeLong et al., 1990), however, we find that the CCI-stock market relationship is not universally positive. We also do not find support for the information effect documented in previous literature, but identify a more subtle relationship between consumer expectations about future household finances and stock market fluctuations.",
author = "Elena Ferrer and Julie Salaber and Anna Zalewska",
year = "2016",
doi = "10.1080/1351847X.2014.963634",
language = "English",
volume = "22",
pages = "195--220",
journal = "The European Journal of Finance",
issn = "1351-847X",
publisher = "Routledge",
number = "3",

}

TY - JOUR

T1 - Consumer confidence indices and stock markets’ meltdowns

AU - Ferrer,Elena

AU - Salaber,Julie

AU - Zalewska,Anna

PY - 2016

Y1 - 2016

N2 - Consumer confidence indices (CCIs) are a closely monitored barometer of countries’ economic health, and an informative forecasting tool. Using European and US data, we provide a case study of the two recent stock market meltdowns (the post-dotcom bubble correction of 2000-2002 and the 2007-2009 decline at the beginning of the financial crisis) to contribute to the discussion on their appropriateness as proxies for stock markets’ investor sentiment. Investor sentiment should positively covary with stock market movements (DeLong et al., 1990), however, we find that the CCI-stock market relationship is not universally positive. We also do not find support for the information effect documented in previous literature, but identify a more subtle relationship between consumer expectations about future household finances and stock market fluctuations.

AB - Consumer confidence indices (CCIs) are a closely monitored barometer of countries’ economic health, and an informative forecasting tool. Using European and US data, we provide a case study of the two recent stock market meltdowns (the post-dotcom bubble correction of 2000-2002 and the 2007-2009 decline at the beginning of the financial crisis) to contribute to the discussion on their appropriateness as proxies for stock markets’ investor sentiment. Investor sentiment should positively covary with stock market movements (DeLong et al., 1990), however, we find that the CCI-stock market relationship is not universally positive. We also do not find support for the information effect documented in previous literature, but identify a more subtle relationship between consumer expectations about future household finances and stock market fluctuations.

UR - http://www.scopus.com/inward/record.url?scp=84907892152&partnerID=8YFLogxK

UR - http://dx.doi.org/10.1080/1351847X.2014.963634

U2 - 10.1080/1351847X.2014.963634

DO - 10.1080/1351847X.2014.963634

M3 - Article

VL - 22

SP - 195

EP - 220

JO - The European Journal of Finance

T2 - The European Journal of Finance

JF - The European Journal of Finance

SN - 1351-847X

IS - 3

ER -