A pioneering tool for tracking consumer behavior, the IZA/Fable SWIPE Consumption Index is a product of collaboration between the IDSC (IZA’s Research Data Center) and Fable Data, Europe’s top aggregator of credit card transaction data. By merging IDSC’s “It’s all about data” philosophy with Fable’s “Data for Good” initiative, the index offers an innovative, data-driven way to monitor consumer spending. Data flows seamlessly each night from Fable’s systems to IDSC’s computational infrastructure, ensuring the index remains continuously updated.
Germany’s first big-data consumer indicator, introduced by IDSC Head Nikos Askitas alongside Fable coauthors Anoop Bindra Martinez and Fabio Saia Cereda in the Journal of Economics and Statistics, offers a valuable complement to traditional survey-based indices. While established methods focus on measuring “propensity to purchase,” the SWIPE Index provides near real-time insights. Published monthly as a public resource, it benefits economists, policymakers, journalists, and the general public alike.
Consumption and the Labor Market
Household consumption drives more than half of Germany’s GDP, underscoring its crucial role in economic growth and its significant influence on the labor market. The relationship between consumption and the labor market forms a dynamic feedback loop that can either accelerate or hinder economic progress. When consumption increases, it stimulates economic growth, boosting labor demand, raising wages, and enhancing consumer confidence—creating a cycle of further spending. On the other hand, declining consumption can slow growth, weaken labor demand, and depress wages, which in turn erodes consumer confidence and reduces consumption even further.
Several key factors demonstrate this interdependency:
- Job Security: Workers confident in their job stability are more inclined to spend, whereas those fearing job loss tend to save more, reducing overall consumption.
- Wage Growth: Rising wages fuel spending on discretionary goods, while stagnant or declining wages constrain purchasing power, limiting consumption.
- Unemployment: Income loss due to unemployment or underemployment directly reduces spending.
- Job Types: Higher-paying jobs support greater consumer spending, while lower-wage employment restricts it.
Correlation with Eurostat Consumption Data
The IZA/Fable SWIPE Consumption Index closely aligns with official quarterly data from Eurostat, as shown in the figure below. Since our index is updated monthly and in near real-time, it serves as a useful tool for forecasting official consumption data.
How the Index Works
The IZA/Fable SWIPE Consumption Index tracks monthly credit card spending, comparing each month’s data to the same month of the previous year, effectively accounting for seasonal variations. Given the nature of the data (an unbalanced panel), the index focuses on year-on-year changes in aggregate spending from consumers who were active in both periods. This approach ensures a more accurate reflection of underlying consumption trends.
Interpreting the Index is straightforward:
- Positive values indicate year-on-year consumption growth, where any value above zero signals a positive trend in consumer spending.
- Negative values reflect a year-on-year contraction in spending, meaning values below zero suggest a decline in economic activity.
- An upward trend signals accelerating spending, while a downward trend indicates a slowdown.
A preliminary index value for each month is released around mid-month, with continuous updates based on incoming daily data. The final value is published two to three days after the end of the month.
To monitor the index or embed it on your website (as demonstrated below), visit the IZA/Fable SWIPE Consumption Index website. We are also expanding the index to include data for the UK and France in an upcoming phase.