- March sentiment expected to fall upon revision.
- Widespread job losses will drive overall sentiment down.
- Weaker consumer sentiment will likely mean lower consumer spending.
The University of Michigan will release its revised Survey of Consumers for March on Friday March 27th at 14:00 GMT 10:00 EDT
The final Consumer Sentiment Index is expected to drop to 90 in March from the preliminary reading of 95.9 and 101 in February and 99.8 in January.
Michigan Consumer Sentiment
Consumer sentiment and the US economy
The US depends on an employed and optimistic consumer to drive the 70% of economic activity that derives from consumption. Until the viral outbreak both inputs to that equation were at high levels. A booming labor market and rising wages meant consumers were happy and spending.
Job losses, primarily from the enforced closures of many service businesses but also from the population’s voluntary restriction of many of their actions, have soared with more than 3 million people filing for unemployment insurance last week.
The impact of the overturned labor market will be far more widespread than just on the people who lost their jobs. The threat of unemployment may now be the key factor in many decisions made by households and individuals in the next weeks and months.
Under these unusual and uncertain conditions of employment and financial solvency consumers will likely curtail spending until their own and the national situation is clarified. Normally the more worried consumers are the greater will be the suspension of their credit cards and the greater the hit to US economic growth.
Though consumer sentiment is one of the prime ingredients in the US economic outlook and a drop would usually be considered a cause for alarm, these are not normal circumstances.
A serious decline in consumer sentiment is the new operating assumption, if not in March then surely in April.
However, in the current unique situation this may mean less than it would otherwise. Economic statistics are of less importance right now than the progress of the government in curbing the spread of the Coronavirus. The economic basis of this focus is the logical assumption that as soon as the virus threat is diminished or eliminated spending and the economy will return with a flare.
It may or may not be warranted but it is a vote for the resiliency and optimism of the American 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. The author will not be held responsible for information that is found at the end of links posted on this page.
If not otherwise explicitly mentioned in the body of the article, at the time of writing, the author has no position in any stock mentioned in this article and no business relationship with any company mentioned. The author has not received compensation for writing this article, other than from FXStreet.
FXStreet and the author do not provide personalized recommendations. The author makes no representations as to the accuracy, completeness, or suitability of this information. FXStreet and the author will not be liable for any errors, omissions or any losses, injuries or damages arising from this information and its display or use. Errors and omissions excepted.
The author and FXStreet are not registered investment advisors and nothing in this article is intended to be investment advice.