Sentiments and spending intentions: Evidence from Florida

Abstract

Consumer sentiment is considered an important indicator of changes in household spending. However, the evidence of the causal relationship between sentiment and consumption is mixed and scarce. We address this gap using data from the monthly Florida Consumer Attitude Survey, which captures party affiliation, consumer sentiment, and spending intentions since 1991. We employ political partisanship as an instrument for sentiment and find a significant effect of sentiment on spending intentions. Finally, we provide evidence that spending intentions relate to actual spending and show that spending increased among counties with a larger share of Republican voters following the 2016 presidential election.