With No End In Sight To COVID-19, Economic Sentiment Continues to Decline With Confidence In Overall U.S. Economy Reaching Historic Low

Overall consumer economic sentiment dropped 1.3 points to 41.5, according to the HPS-CivicScience Economic Sentiment Index (ESI), the second-lowest recording in ESI history behind March 2020 when the COVID-19 pandemic began. This week’s decline was driven by falling confidence in all five ESI indicators, including confidence in the overall U.S. economy, which hit its lowest reading ever. 

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All five of the ESI’s indicators fell over the past two weeks. Confidence in the overall U.S. economy dropped the most, falling 1.6 points to a historic low of 35.5 as consumers’ outlook on the next six months soured. Fatigue of the relentless pandemic, as well as consumer fears of rising energy prices, stagflation, and ongoing supply chain disruptions, are all weighing heavily on the economy. The ESI’s overall downward slump was also driven by declines in every other indicator:

– Confidence in finding a new job sank 1.5 points to 55.9

– Confidence in making a major purchase declined 1.3 points to 31.3

– Confidence in personal finances dropped 0.4 points to 54.3

– Confidence in the housing market fell 1.3 points to 30.7

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The ESI’s three-day moving average began the period at its high of 43.8 on September 29. It wavered over the next two weeks while declining overall, reaching its low of 40.2 on October 2 and closing at 42.9 on October 12.

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The next ESI release will be Wednesday, October 27.

A Speckle Of Relief For Economic Sentiment

Economic sentiment experienced its first positive movement since early August, as the HPS-CivicScience Economic Sentiment Index (ESI) eked out a 0.3 gain, after an uptick in the ESI’s three-day moving average since September 25. Leading the charge were jumps in confidence in the housing market and finding a new job.

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Four of the ESI’s five indicators rose over the past two weeks. Confidence in the housing market rebounded slightly from its longstanding slide, rising 1.4 points to 32.0. The housing market showed signs of slowing in recent weeks as home-price growth eased. In the broader economy, there are indications that recent inflation may persist longer than expected, and unemployment numbers continue to be mixed. The ongoing congressional debates over President Biden’s agenda, the federal budget, and raising the debt ceiling may also weigh more heavily on consumers’ minds in coming readings. Here’s how the ESI’s other indicators moved:

– Confidence in finding a new job rose 1.2 points to 57.4

– Confidence in making a major purchase rose 1.0 point to 32.6

– Confidence in the overall U.S. economy rose 0.4 points to 37.1

– Confidence in personal finances dropped 2.7 points to 54.7

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The ESI’s three-day moving average began the two-week stretch at 43.8 on September 15, peaking the next day at 45.4. The moving average then declined, bottoming out at 39.3 on September 25 before quickly recovering and closing at 44.0 on September 28.

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Economic Sentiment Unchanged As Consumers Digest Mixed Economic Signals

Overall economic sentiment was unchanged over the past two weeks, as consumers digested an array of differing economic indicators. The HPS-CivicScience Economic Sentiment Indicator (ESI) remained at 42.5.

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While overall economic sentiment remained the same since last period, the ESI’s five constituent indicators did make moves. Confidence in personal finances rose 2.1 points to 57.4. Meanwhile, confidence in the overall U.S. economy declined 1.3 points to 36.7.

Consumers are seeing mixed economic signals and raising questions surrounding the impact inflation and the Delta variant. Consumer spending is still outpacing pre-pandemic levels: JPMorgan Chase debit and credit card spending, for example, is currently 18-19% higher than 2019 levels. Yet the economy also faces a variety of potential headwinds; some employees are seeing wage increases get eaten up by inflation, while many businesses are reworking Labor Day return-to-work plans because of Delta variant fears. Here is how the ESI’s other indicators moved:

– Confidence in finding a new job declined 0.8 points to 56.2

– Confidence in making a major purchase declined 0.1 points to 31.6

– Confidence in the housing market rose 0.2 points to 30.6

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The ESI’s three-day moving average began at 43.4 on September 1, remaining largely flat before bottoming out at 41.8 on September 7. The moving average then rose over the second week and closed out at its high of 43.7 on September 14.

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The next release of the ESI will be Wednesday, September 29, 2021.

Economic Sentiment Nears Historic Low Set At Start Of Pandemic

Economic sentiment continued its decline over the past two weeks, with consumers expressing a particular lack of confidence in the overall U.S. economy. The HPS-CivicScience Economic Sentiment Index (ESI) dropped 0.4 points to 42.5, nudging closer to the all-time low of 40.1 reached in March 2020 when the COVID-19 pandemic hit the United States.

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Of the ESI’s five indicators, confidence in the overall U.S. economy fell the most over the past two weeks, dropping 2.5 points to 38.0—down 18.6 points from the 2021 high reached in March. The drop comes as the Delta variant continues to make its presence felt nationally and globally. Restaurant dining, office occupancy, and airline travel all saw declines in recent weeks compared to earlier this summer. Concerns about inflation, meanwhile, show no signs of letting up: The PCE Index was up 4.2% in the 12 months ended July 2021, the highest rate since 1991. The ESI’s other indicators made the following moves:

– Confidence in personal finances dropped 1.7 points to 55.3

– Confidence in making a major purchase dropped 0.8 points to 31.7

– Confidence in the housing market rose 2.1 points to 30.4 but remains near all-time lows

– Confidence in finding a new job rose 0.5 points to 57.0

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The ESI’s three-day moving average began the two-week stretch on August 18 at 42.4. It remained fairly stable before reaching its two-week low of 41.3 on August 24. Then it recovered and closed out the week at its high of 43.6 on August 31.

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The next release of the ESI will be Wednesday, September 15, 2021.

Consumer Confidence Hits Lowest Point Since April 2020

Over the past two weeks, economic sentiment slumped to its lowest reading since April 2020, with the HPS-CivicScience Economic Sentiment Index (ESI) declining 2.3 points to 42.9. Overall confidence in the U.S. economy sank dramatically, driving the decline along with record-low confidence in the housing market and near record-low confidence in making a major purchase.

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After a slight nudge upward in the last reading, economic sentiment returned to its downward summer trend as the Delta variant surged around the country. Confidence in the U.S. economy plummeted 6.1 points to 40.5, the lowest reading since October 2019. Housing market confidence slid 0.7 points to a record low of 28.3, as home prices continued to soar. As inflation continues to pick up, consumers are quickly losing confidence about making a major purchase, with confidence falling 3.8 points to the second-lowest reading in ESI history, 32.5. Despite a strong July jobs report, labor market sentiment also fell, dropping 2.1 points to 56.5. The only indicator to rise was personal finances, increasing 1.4 points to 57.0.

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The three-day moving average began on August 4 at 42.7 and oscillated for the two-week period, reaching its high of 44.9 on August 9 and closing at 44.1 on August 17.

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The next release of the ESI will be Wednesday, September 1, 2021.