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RESEARCH PRODUCT

Consumer confidence: Causality links with subjective and objective information sources

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Abstract This study analyses the relationship of causality between consumer confidence and the economic information ecosystem from subjective (i.e., business sentiment) and objective sources (financial information from listed companies and the stock index). Our sample covers Spain from June 2011 to December 2018. Our results show that consumer confidence and economic information can exert a causality influence on each other. The results show Granger causality from IBEX35 and total assets in the financial sector and leverage of the companies in the energy sector to the consumer confidence index (CCI), in the first lag: from operating income in the telecommunications sector to the CCI in the first and fourth lag. Finally, a partial least squares regression model for consumer confidence shows that consumers interpret greater leverage in the energy sector and larger operating income in the telecommunications sector as a sign of instability and foreseeable worsening of future economic conditions, whereas the stock index has a positive link with consumer confidence. Our study contributes to consumer confidence literature, because we not only examine the relationship with stock indexes but also with new variables related to the largest companies in the economy and business sentiment of the smallest business, as information ecosystems.