• Consumer confidence predicted to reach a six year low.
  • Unemployment driving outlook toward recession levels.
  • Michigan consumer sentiment lowest since December 2011.
  • Consumption under pressure from job losses.

The labor market debacle has reached into American households prompting the greatest unease since the recovery from the financial crisis recession.

Consumer confidence from the Conference Board is expected to fall 40 points in April its largest one month decline in the series history. The plunge to 80 from 120 in March comes as 26.4 million people have lost their jobs in the last five weeks, 16% of the labor force, idling an unknown portion of the US economy.  Another 3.5 million people are expected to file for jobless benefits this week, bringing the total in six weeks 30 million.


Payrolls shed 701,000 jobs in March and the accounting for April is projected to be several times worse when it is reported on May 8.

The economy is forecast to shrink 4% in the first quarter despite having been expanding at a 2.7% rate before state governments ordered most commercial activity closed in an effort to prevent the spread of the Coronavirus.  The Bureau of Economic Analysis’ GDP figures are issued this Wednesday at 8:30 am EDT.

Michigan consumer sentiment for April was revised to 71.8 from 71, better than the 68 meidan estimate but stil the lowest since December 2011. 

Michigan consumer sentiment


Consumer spending

Consumption is the lifeblood of the US economy and consumer confidence backed by employment are the key ingredients behind household spending. 

Retail sales collapsed 8.7% in March, the largest amount in records back to 1992, and that was before the full impact of the labor crash which began in the third week of March.

Retail sales


Purchases of store based goods saw the largest fall.  Automobile dealerships, the majority of which are closed across the country, sold 25.6% fewer cars, furniture and home furnishings store receipts dropped 26.8% and restaurant and bar bills declined 26.5%.

Food and beverage store purchases rose 25.6% as did the health and personal care group including pharmacies which gained 4.3%.Internet shopping, the Census Bureau’s non-store retailers category, rose 3.1% as many families turned to Amazon and the delivery services at such giants as Walmart for food, staples and other essentials. 

Despite the surge in on-line sales the plunge in regular store purchases and near closure of all service establishments from barber shops and beauty parlors to bowling lanes and movie theaters drained far more from the economy than the internet replaced.

Conclusion: Confidence, markets and the dollar

The equity market seems confident that the American consumer will return to form once the shutdowns are lifted and a good portion employment returns, hence its notable recovery since the low of March 23.


Credit and currency markets are less convinced. Treasury yields remain near their all-time lows with bond prices buoyed by the Federal Reserve’s $500 billion purchased program. The 10-year bond was returning 0.645% as at this writing.  Its record low close was 0.498% on March 9.  The dollar has retained the safety-trade edge acquired as the pandemic panic exploded in March in all the major pairs except the USD/JPY.

With so much riding on the willingness of Americans to resume their normal lives, the attitudes of everyday citizens are as important, if not more so, than the most astute economic predictions. Indeed the markets are almost completely beholden to the optimism of the US consumer.     



Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers.

Analysis feed

FXStreet Trading Signals now available!

Access to real-time signals, community and guidance now!

Latest Analysis

Latest Forex Analysis

Editors’ Picks

EUR/USD hits highest since September amid upbeat mood

EUR/USD has surpassed 1.1920, the highest in around 10 weeks as markets cheer the US transition and upcoming vaccines. A busy data day awaits traders ahead of the Thanksgiving holiday. 


XAU/USD stages a modest recovery from multi-month lows

Gold witnessed some short-covering move on Wednesday from the $1800 mark. COVID-19 vaccine optimism might cap any strong gains for the safe-haven metal. Investors now eye US macro data, FOMC minutes for a fresh directional impetus.

Gold news

GBP/USD advances toward 1.34 amid Brexit hopes

GBP/USD is rising toward 1.34 after EC President von der Leyen said there is progress in Brexit talks. UK Chancellor Sunak's speech and US data are awaited later in the day.


WTI rally continues despite large US inventory build

Oil has climbed to fresh multi-month highs, extending Tuesday's price gains as optimism emanating from potential coronavirus vaccines overshadows inventory build-up in the US. The API reports a large buildup of inventories in the weeke ended Nov. 20.

Oil News

Black Friday 2020 Discounts!

Learn to trade with the best! Don't miss the most experienced traders and speakers in FXStreet Premium webinars. Also if you are a Premium member you can get real-time FXS Signals and receive daily market analysis with the best forex insights!

More info

Forex Majors