The Impact of National Debt and Budget Deficits on U.S. Consumer Confidence.

摘要

For over seventy years the literature surrounding the national debt has centered on the question of whether public debt should be of concern or not. This study aims to empirically determine how the average consumer actually does view the national debt. To accomplish this, the University of Michigan Index of Consumer Sentiment served as a proxy for overall consumer outlook, while determining the statistical significance of five economic factors to observed sentiment.;A Hierarchical Multivariate Linear Regression model was utilized in the study, first examining three established economic variables (unemployment, inflation, and financial market performance) before considering two new independent variables (level of national debt and federal budget deficits). Debt and deficit are calculated as percentages of real gross domestic product to allow for historical comparisons of debt/deficit levels over time. Data was compiled monthly and covered the years 1992 -- 2012.;The linear regression covering the period finds that the level of national debt, as a percentage of real gross domestic product, and the federal budget deficit, also calculated as a percentage of real gross domestic product, are both statistically significant with regards to observed consumer sentiment. Furthermore, the standardized beta coefficients from the regression show that unemployment is the most important explanatory variable of consumer sentiment, followed by the level of national debt, inflation rate, the federal budget deficit, and finally stock market performance.