• Sentiment expected to edge higher to 75 in September from 74.1.
  • Labor market, Covid-19 and civil turmoil may be weighing on consumers.
  • Retail sales weakened in August on waning stimulus, continuing layoffs.
  • Market impact of consumer sentiment figures will be limited.

The recovery in American consumer attitudes has stalled.  June’s promising jump to 78.1 has reverted to late summer lethargy barely above the April lockdown low of 71.8.  

Preliminary reading for September from the University of Michigan Survey is forecast to be 75 up from 74.1 in August but distant from the pre-pandemic level of 101 in February.

Michigan consumer sentiment



Initial jobless claims and NFP

Employment is the most important factor in consumer outlook.  Plentiful jobs, and particularly the ability to find new work underpins household finances, consumption and sentiment.

The rapid recovery in May and June from the extreme job losses in the shutdown months was behind the June bounce in optimism. Recovery began in May, far sooner than economists had predicted and in two months 7.49 million people were rehired, almost one-third of the 22.16 million fired in March and April.  Hiring has continued at a strong pace in July and August with another 3.105 million returnees.  Yet the 10.595 million workers back on the job were just 47.8% of the pandemic losses. 

Weekly initial jobless claims have dropped 84% from their high in the four-week moving average of 5.790 million on April 17 to 0.912 million on September 11. Claims in the latest week were slightly more than the 850,000 forecast at 860,000 and the prior week was revised 9,000 higher to 893,000.

Jobless claims, 4-week moving average



Though the improvement in claims is large statistically, layoffs are still running at nearly one million a week six months after the lockdowns began.

For consumers the reality of the labor market and the economy as a whole is that a full recovery from the pandemic collapse is months if not years away and that is the inescapable background to consumer sentiment.

Covid-19 and civic turmoil

The pandemic has receded from its omnipresent position of several months ago but the threat of renewed closures lingers and several of the largest states, New York and California included, have still to fully reopen their economies.   

Civic turmoil is also casting a pall over the consumer mood. Protests over alleged police brutality, riots, looting, the never-ending demands of cancel culture on American history and the unsettling and sometimes excessive rhetoric of the presidential campaign have made it difficult for consumers to be optimistic about the future.

With the country almost equally divided on the election one side or the other is going to be very disappointed on November 4. 

These are not the social and political conditions for brewing consumer optimism.

Retail sales

Sales in August were considerably weaker than forecasts. Overall purchases rose 0.6% on an educated guess for a 1% increase and the GDP component control group slipped 0.1%, well below its 0.5% prediction.  July’s figures were revised down to 0.9% from 1.4% for sales and to 0.9% for control from 1.2%.

Retail sales


The exceptional averages for the six months from March to August, 0.87% for sales and 1.28% for control, including the historic collapse in March and April and the even larger surge in May and June were due to huge amounts of deferred spending and confidence from the many government support programs. Some of those programs have now lapsed.

With the economy no longer under dire threat Congress has been unable to decide between partisan politicking and consumer necessity and further stimulus is not a certainty.

Conclusion and markets

Consumer sentiment is a second level statistic. It is an important part of the economic background but its essentially emotional readings rarely prompt market movement. 

The case for a strengthening US recovery would receive a boost from better than anticipated consumer attitudes and in turn that might improve the general outlook for the US dollar but the impact at release will be negligible.


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 fresh two-month highs amid dollar weakness

EUR/USD has hit new two-month highs above 1.1940 as the dollar resumes its decline. Optimism about the US transition and covid vaccines is weighing on the safe-haven dollar. 


GBP/USD falls toward 1.33 amid Brexit acrimony

GBP/USD is falling toward 1.33 as both the EU and the UK are busy blaming each other for an impasse in Brexit talks. The thorny issues remain fisheries, governance and setting a level playing field.


XAU/USD attempting to bounce up from $1,775 low

Gold futures accelerated heir downtrend from last week highs near $1,900, breaking below the 200-day SMA, at $1,800 area, to hit its lowest prices in nearly five months, at $1,775.

Gold news

Dollar offered ahead of the weekend

Equities are finishing the week on a firm tone, while the US dollar remains heavy. In the Asia Pacific, only Australia and India did not end the week on a firm note.

Read more

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