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Development of "Alternative Data Consumption Index":Nowcasting Private Consumption Using Alternative Data

July 28, 2022
Tomohiro Okubo*1
Koji Takahashi*2
Haruhiko Inatsugu*3
Masato Takahashi*4


In the field of macroeconomic analysis, there has recently been a growing interest in "alternative data" or nontraditional data whose information sources differ from those of existing statistics. Using alternative data that become timely available, this paper aims to capture developments in Japan's private consumption at the macro level earlier than existing statistics. We construct the "Alternative Data Consumption Index" (ALC) by combining three types of alternative data: (1) credit card transaction data (JCB Consumption NOW); (2) point-of-sale (POS) data (METI POS and GfK); and (3) spending records obtained from a personal financial management service (Money Forward). We nowcast the Consumption Activity Index (CAI), which is compiled and released by the Bank of Japan, using the ALC. With respect to timeliness, the ALC has a significant advantage over the CAI; the ALC for the month is available in the middle of the following month, approximately 3 weeks earlier than the release of the CAI. Our findings show that the ALC is generally accurate in nowcasting the CAI and thus aggregate consumption developments. It also accurately captures the substantial changes in consumption activities caused by the spread of COVID-19 since spring 2020. Overall, the results suggest that alternative data can capture macro level consumption activity promptly and accurately, making them a powerful tool for understanding economic conditions.

JEL classification
C49, E21, E27

Nowcasting, Alternative Data, Private Consumption

The authors thank Seisaku Kameda, Takuji Kawamoto, Tomohiro Sugo, Teppei Nagano, Koji Nakamura, Tomoyuki Yagi, and staff members of the Bank of Japan for their valuable comments. Any remaining errors are our own. We also thank Yuko Kobayashi for her assistance in preparing this English version. Money Forward, Inc. provided the de-identified, aggregated dataset of Money Forward ME transactions to the authors only for this research purpose. The views expressed in this paper are those of the authors and do not necessarily reflect the official views of the Bank of Japan or Money Forward, Inc.

  1. *1Research and Statistics Department, Bank of Japan
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  2. *2Research and Statistics Department (currently at the Personnel and Corporate Affairs Department), Bank of Japan
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  3. *3Research and Statistics Department, Bank of Japan
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  4. *4Research and Statistics Department, Bank of Japan
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