The potential of Big Data – Can patterns in consumer spending predict economic sentiment?

financial-markets-and-institutions||38
Sector:Financial markets and Institutions
Published: December, 2013
Document type:LE publication (working papers and economic briefs) 
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BBVA is the first banking institution to make Big Data on real trading activity publicly available. In particular, hourly credit card transaction data was provided for the cities of Madrid and Barcelona on a geographically granular basis for a period of six months toward the end of 2012 and beginning of 2013. London Economics used this opportunity to explore the potential of this data for predicting economic sentiment.

 

The findings show that the difference in spending on high-spending days (e.g. Saturdays) relative to low-spending days (e.g. Sundays or Mondays) at food retailers in central Madrid can predict consumer confidence. This result hints at the potential Big Data has for providing timely information on the state of economy that can be incorporated into economic policymaking decisions long before traditional survey data becomes available.