• Consumer sentiment expected to be unchanged in January.
  • Current conditions to fall slightly, expectation to rise the same.
  • Labor market strength remains key to consumer sentiment.
  • US-China trade deal should remove any lingering labor concerns.

The University of Michigan will release its preliminary Survey of Consumers for January on Friday January 17th at 15:00 GMT 10:00 EST

The survey consists of three indexes--the Index of Consumer Sentiment, the Index of Current Economic Conditions and the Index of Consumer Expectations. Each is revised once. The survey began in 1978.


The Consumer Sentiment Index is expected to be stable at 99.3 in January.  The Current Conditions Index will slip to 115.00 from 115.5 in December. The expectations Index will rise to 89.0 in January from 88.9 in December.

Michigan Consumer Sentiment


Consumer Sentiment and the labor market

Jobs and wages are the most important ingredients in sentiment.  As long as work is plentiful and wages good the consumer is happy. The performance of the US labor market continues to underpin household finances and retail spending.  

December’s modest drop in non-farm payrolls to 145,000 from 256,000 in November will have little effect on consumer attitudes.  Even the longer term decline from 235,000 in the 12-month moving average in January to 174,000 at year end is still well above number of new workers entering the labor force.   The wage gains of the last 18 months have given households the best income improvement in a decade and with unemployment at a 50 year low of 3.5% the trend is positive.

Annual Average Hourly Earnings


New manufacturing employment dropped almost 80% last year from a total of 246,000 hires in 2018 to 46,000 in 2019. That decline was largely the result of the US-China trade dispute.  It is likely, though not assured that the phase one trade deal signed in Washington on January 15th will revive that sector. It is one of the signs that analysts will be watching.

Initial jobless claims have reversed their rise of three weeks ago to 233,500 and dropped to 216,250 in the latest (January 9th) week. Except for a dip in April to 201,500 and this is also the lowest reading in 50 years.  It must be remembered that these scores relate to the size of the labor force and population.  In 1969 the US population was 200 million.

From November 2016 to the past December the Michigan Sentiment Survey has been sustained at levels not seen in over 20 years.  In the 41 years of the series there is only one comparable period, from March 1998 to August 2002.

Retail sales

Consumer spending in December was better than anticipated. Overall sales rose 0.3% as predicted matching the November result. Purchases ex-autos climbed 0.7%, ahead of the 0.5% forecast and surpassing November’s revised flat score.   The GDP component control group also improved last month rising 0.5% on an 0.4%% projection though the November figure was revised to -0.1% from 0.1%.

Conclusion and the dollar

With the signing of the US-China trade deal one of the main impediments to faster American growth has been eliminated.  

Consumer sentiment was not overtly affected by the long-running dispute, the brief and partial government shutdown last January had more effect, but the positive developments that are likely to follow the pact should further bolster outlook.

Markets will soon begin to return to comparative economics for currency directions. Consumer sentiment is not a major driver of dollar movement but it is an indicator of where the US economy is headed.  As such it should point to pending strength.

Jobs and wages are the simple and most salient factors for consumer satisfaction. As they remain strong sentiment is unlikely to falter.

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