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Research notes: what's the relationship among the consumer confidence surveys?

* Michael P. Niemira is Vice President and Economist, Mitsubishi Bank, New York, N.Y.

WITH THREE WIDELY watched consumer confidence measures available from (1) the University of Michigan, (2) the Conference Board, and (3) ABC News and Money magazine, it is helpful to understand the differences and how they relate to each other.

The Conference Board survey is done by mail while the other two are telephone surveys. The ABC News/Money poll is the only true weekly poll, although the University of Michigan survey is taken across the month and a preliminary reading is released after about two weeks into the month. All three series are reported in different forms: (1) the University of Michigan series is a net difference plus 100, i.e., 100 + POS - NEG, where POS is the share of the sample reporting better and NEG the share reporting worse; (2) the Conference Board measure is calculated as [POS/(POS + NEG)]; and (3) the ABC News poll is simply POS-NEG and reported on a four-week moving average basis. As the chart shows, all three measures basically tell the same story over time. However, in the short term they can differ. On a monthly average basis, using the end of month observation, the ABC News poll has been less volatile since the onset of the 1990 recession, while the Michigan survey, which has the smallest sample size, tended to be the most volatile.

To relate the various polls to each other, a linear regression was estimated and the results are shown in the table at the bottom of page 65. Of course, the relationship between these measures, by construction, is not linear, so that the results shown in the table are rough rules for relating the surveys. Interestingly, the combination of any two surveys generally explained the third better than individual surveys alone, with the exception that the University of Michigan survey explained the Conference Board measure slightly better alone than in combination with the ABC News/Money poll.
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Author:Niemera, Michael P.
Publication:Business Economics
Date:Apr 1, 1992
Words:332
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