Business cycle indicators have traditionally been expected to capture the common cyclical factors across the economy. More recently, however, a new perspective has emerged ―one that defines business cycles as fluctuations in the aggregate level of economic activity.Under this new view, consumption data from household surveys play a more important role, as they provide comprehensive coverage of consumption ― the largest component of GDP and allow for flexible decomposition useful for business cycle assessment. Until now, the only demand-side source of consumption data has been the Family Income and Expenditure Survey (FIES), which has not been fully utilized as a business cycle indicator due to concerns over its accuracy. To address these challenges, the Ministry of Internal Affairs and Communications began publishing the Consumption Trend Index (CTI-micro) in 2018. This index is constructed by integrating the FIES with the Survey of Household Economy and the Expenditure Monitor Survey for One-person Households. While the CTI-micro is useful for tracking average household consumption, its ability to reflect macro-consumption trends is limited—especially amid rising ratios of single-person households and an increasing number of households overall. To address this limitation, this paper constructs a Population-Adjusted CTI-micro, which incorporates household count data from the Labor Force Survey, and examines its potential use as a real-time business cycle indicator. The Population-Adjusted CTI-micro effectively tracks the macro-consumption in the GDP statistics over the medium term. It allows for flexible decomposition and offers advantages over the CTI-macro, which estimates total consumption only as a single aggregate series. Although the index exhibits relatively large short-term fluctuations, it remains a valuable and sensitive tool for detecting changes in economic conditions

Takashi Unayama
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Takashi Unayama: Professorat Institute of Economic Research, Kyoto University

Public Policy Review, 2025, vol. 21, issue 4, 1-29

Keywords: business cycle; Consumption Trend Index; FIES; consumption indicator (search for similar items in EconPapers)
JEL-codes: C81 C83 D12 (search for similar items in EconPapers)
Date: 2025
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