Consumer confidence improves — is the recession coming to an end?
Mika Maliranta (2024) highlights in his editorial (in Finnish) in the journal Talous & Yhteiskunta the importance of trust in the functioning of the economy. In economics, trust between actors is thought to matter for consumption decisions, investment, and the development of inflation alike. For example, consumers’ positive expectations of future growth and wage development are seen as themselves feeding economic growth as the propensity to consume increases. Correspondingly, the central bank seeks to make use of the relationship between inflation expectations and future inflation developments in its monetary policy. Modern research has found that various confidence indicators have significant explanatory and predictive power for the current state and future of the economy (Mourougane & Roma, 2003; Pönkä & Stenborg, 2020). This article provides an overview of the outlook of the most central indicators measuring consumer confidence. (AI translation)
