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Adam Baumann
- 7 August 2025
- ECONOMIC BULLETIN - BOXEconomic Bulletin Issue 5, 2025Details
- Abstract
- This box examines euro area household perceptions of rising defence spending, a trend reinforced by EU governments’ commitments at recent security discussions. According to the May 2025 ECB Consumer Expectations Survey, 81% of households anticipate increased defence spending within the next year. Public debt is seen as the most likely source of financing, followed by cuts in other spending and tax hikes. Households predict a slight increase in inflation in response to higher defence spending, while their expectations on growth are more varied. They expect their financial well-being to stay largely the same, suggesting that increased defence spending will not have a strong impact on their propensity to spend.
- JEL Code
- D12 : Microeconomics→Household Behavior and Family Economics→Consumer Economics: Empirical Analysis
E62 : Macroeconomics and Monetary Economics→Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook→Fiscal Policy
H56 : Public Economics→National Government Expenditures and Related Policies→National Security and War
- 6 August 2025
- ECONOMIC BULLETIN - BOXEconomic Bulletin Issue 5, 2025Details
- Abstract
- Consumer confidence plays an important role in determining economic activity. This box presents a consumer confidence indicator derived from the ECB’s Consumer Expectations Survey to explore its relation with household consumption. Analysis reveals that confidence levels vary by income quintile, with high-income households demonstrating greater sensitivity to economic news, in line with their greater financial literacy and higher share of discretionary spending. The consumer confidence indicator at the individual level is closely related to the actual spending of households, corroborating its usefulness for monitoring ongoing consumption growth. Developments in consumer confidence in 2025 to date point towards muted consumption growth overall, especially for households in the top 20% income bracket.
- JEL Code
- D12 : Microeconomics→Household Behavior and Family Economics→Consumer Economics: Empirical Analysis
E21 : Macroeconomics and Monetary Economics→Consumption, Saving, Production, Investment, Labor Markets, and Informal Economy→Consumption, Saving, Wealth
- 30 April 2025
- THE ECB BLOGThe ECB Blog explores how European consumers react to the prospect of higher trade tariffs. It finds that many are very willing to switch away from US products.Details
- JEL Code
- F10 : International Economics→Trade→General
- 13 February 2025
- ECONOMIC BULLETIN - BOXEconomic Bulletin Issue 1, 2025Details
- Abstract
- The inflation surge seen in the past few years has had a negative impact on consumer perceptions about real incomes. These perceptions seem to persist even as real income has actually improved over time. This behaviour, which can be seen as a form of pessimism, is particularly strong among lower and middle-income households and has had a negative impact on actual consumption. These findings underscore the importance of perceptions in economic behaviour. As pessimism following large economic shocks typically disappears, albeit gradually, consumption should gain momentum as perceptions about real incomes improve.
- JEL Code
- D84 : Microeconomics→Information, Knowledge, and Uncertainty→Expectations, Speculations
D91 : Microeconomics→Intertemporal Choice→Intertemporal Household Choice, Life Cycle Models and Saving
E21 : Macroeconomics and Monetary Economics→Consumption, Saving, Production, Investment, Labor Markets, and Informal Economy→Consumption, Saving, Wealth
G51 : Financial Economics