Adam Baumann
- 14 January 2026
- ECONOMIC BULLETIN - BOXEconomic Bulletin Issue 8, 2025Details
- Abstract
- Data from the ECB Consumer Expectations Survey allow the construction of a housing Sharpe ratio, which relates the return on housing investment to its risk. Over time, the housing Sharpe ratio has mostly been driven by house price growth expectations (in excess of a riskless return), with changes in house price uncertainty playing a more limited role. However, varying perceptions of price uncertainty do drive differences in the housing Sharpe ratio across household groups: lower uncertainty explains higher ratios for male, older, wealthier, employed and more financially literate households as well as renters relative to their counterparts. Households living in urban areas also have higher ratios, driven by higher house price expectations. The housing Sharpe ratio has been steadily recovering from its trough in 2023 and points to a further moderate recovery in housing investment in the euro area.
- JEL Code
- R21 : Urban, Rural, Regional, Real Estate, and Transportation Economics→Household Analysis→Housing Demand
D84 : Microeconomics→Information, Knowledge, and Uncertainty→Expectations, Speculations
D14 : Microeconomics→Household Behavior and Family Economics→Household Saving; Personal Finance
- 22 September 2025
- ECONOMIC BULLETIN - BOXEconomic Bulletin Issue 6, 2025Details
- Abstract
- Recent trade tensions and tariff announcements are significantly influencing the behaviour and expectations of European consumers. As revealed by the June 2025 Consumer Expectations Survey, consumers expect tariffs to drive up inflation, weaken household finances and dampen economic growth. In response, consumers are reducing overall spending or switching away from US products. While lower-income households are likely to cut back on spending, high-income households are more likely to substitute goods. These findings highlight the tangible impact of trade tensions and uncertainty introduced by tariffs on inflation and growth expectations, consumer behaviour and, possibly, broader economic developments.
- JEL Code
- D12 : Microeconomics→Household Behavior and Family Economics→Consumer Economics: Empirical Analysis
D84 : Microeconomics→Information, Knowledge, and Uncertainty→Expectations, Speculations
F14 : International Economics→Trade→Empirical Studies of Trade
- 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