- Personal income data for November may reflect the lack of federal support.
- Spending figures may also paint a depressing picture amid the virus' resurgence.
- The dollar may decline in response, yet other figures are also in play.
Investors received a shot in the arm in November – promising vaccine announcements, but consumers only felt the pinch. The penultimate month of 2020 saw a surge in COVID-19 cases, causing shoppers to shy away from stores and several governors to impose restrictions.
Retail sales figures have shown a disappointing drop of 1.1% in expenditure and Personal Spending figures are likely to be a drag as well. After rising by 0.5% in October, economists expect a fall of 0.2% in November.
Despite online Black Friday sales, the downbeat mood likely pushed the data lower and that is already one reason to expect some pressure on the dollar.
The same report also includes Personal Income data, and that is also projected to decline. A decrease of 0.3% is on the cards, after a retreat of 0.7% in October – falling short of estimates back then.
Also here, there is room for disappointment – and not only due to last month's miss. Several federal aid programs lapsed in late July, and their effect is gradually being felt. Some of the funds – such as those in unemployment benefits – went to savings, but these are dwindling.
A weak income figure will likely help justify the $900 billion relief package Congress just passed – perhaps even showing that it is far from enough. It will take time until lawmakers push new legislation under President Joe Biden – if they win control over the Senate. It could add pressure on the Federal Reserve to act sooner than later, weighing on the greenback.
The figures are published ahead of the Christmas holiday when liquidity thins out. This could cause an outsized move, especially if both statistics miss estimates.
On the other, the festive season also means that the calendar is packed and includes also weekly jobless claims and Durable Goods Orders for November. Unemployment applications are set to show a worrying increase, compounding potentially weak income and spending figures and weighing on the dollar.
However, durables may surprise to the upside. The figures represent long-term investment, which is influenced by vaccine news rather than the grim virus situation. That could create volatility and choppiness.
Personal Income and Personal Spending figures will likely be downbeat, weighing on the dollar. However, these statistics could be offset by durable goods orders, complicating the market reaction.
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.