Consumer Confidence Slumps To 2021 Low Amid Spending Reluctance

Economic sentiment fell to its lowest point so far in 2021, as the HPS-CivicScience Economic Sentiment Index (ESI) dropped 2.8 points to 45.0. Amidst a surge in inflation worries, confidence in making a major purchase and confidence in the housing market drove a significant decline.

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After briefly reversing in the last reading, the months-long divergence between confidence in big-ticket purchase indicators and confidence in finding a new job once again entrenched itself over the past two weeks. Confidence in making a major purchase dropped 6.2 points to 33.0, the biggest single decline since the March 31, 2020 reading, while confidence in the housing market dropped 3.9 points to 29.0. Confidence in finding a job was the only indicator to rise over the past two weeks: It jumped 1.1 points to 59.5. Consumers reported record complaints about inflation on big ticket purchases, while the average home loan reached a new record high of $392,370. The other indicators to fall were:

– Confidence in personal finances dropped 2.6 points to 57.5.

– Confidence in the overall U.S. economy dropped 2.5 points to 45.9

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The three-day moving average began on July 7 at its high of 47.9, dropping gradually to its low of 43.4 on July 19 before closing out the week at 43.7 on July 20.

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The next release of the ESI will be Wednesday, August 4, 2021.

Economic Sentiment Rebounds After Two-Month Slide

Economic sentiment rebounded over the last two weeks, ending a slide that lasted from the end of April to the end of June. The HPS-CivicScience Economic Sentiment Index (ESI) jumped 1.5 points on the back of strong gains in confidence in making a major purchase and confidence in the housing market—the same indicators that had been driving the recent drop in economic sentiment.

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This reading represents a slight reversal of a months-long divergence between confidence in the job market on the one hand and confidence in the housing market and making a major purchase on the other. Confidence in the housing market rose 3.8 points (to 32.9; representing this indicator’s first positive move since March) while confidence in making a major purchase rose 4.3 points (to 39.2; the first positive move since April). The changes come as multiple states increased their minimum wage on July 1, and employees are benefitting from the fastest wage growth since the 1980s.

– Confidence in personal finances rose 3.8 points to 60.1, the highest level in over a year.

– Confidence in the job market dropped 3.1 points to 58.4 but remains near all-time highs.

– Confidence in the overall U.S. economy dropped 1.3 points to 48.4.

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The three-day moving average began on June 23 at 45.9, slowly dropping to its two-week low of 44.5 on June 28. The moving average then rose rapidly, peaking at 52.2 on July 3 before closing out the period at 45.8 on July 6.

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The next release of the ESI will be Wednesday, July 21, 2021.

Despite Record-Breaking Confidence In Job Market, Consumers Are Reluctant To Spend

Economic sentiment fell for the fourth straight reading over the last two weeks, as the HPS-CivicScience Economic Sentiment Index (ESI) dropped 1.6 points to 46.3. A new record high for confidence in the job market was not enough to outweigh steep declines in confidence in making a major purchase and confidence in the housing market, with the latter reaching a new record low.

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This reading reflects a continued divergence between confidence in the job market on the one hand and confidence in the housing market on the other. Confidence in the job market rose 2.8 points to 61.5 (the 10th increase over the past 11 readings), while confidence in finding a new home dropped 3.4 points to 29.1 (the seventh straight decline). Consumers find themselves in an economy featuring record-high numbers of open jobs but also historically expensive homes and rising inflation fears. The ESI’s other three indicators also declined:

– Confidence in making a major purchase dropped 4.4 points to 34.9, the lowest point since April 2020.

– Confidence in the overall U.S. economy declined 2.3 points to 49.7.

– Confidence in personal finances dipped 0.5 points to 56.3.

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The three-day moving average began on May 26 at 47.1, rising to its peak of 48.3 on June 13. It reached its two-week low of 43.5 on June 16, before closing the period at 46.2 on June 22.

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The next release of the ESI will be Wednesday, July 7, 2021.

Consumer Confidence Continues To Slip With Record-Low Confidence On Purchasing A New Home

Economic sentiment fell for the third straight reading over the last two weeks, according to the HPS-CivicScience Economic Sentiment Index (ESI), dropping 0.8 points to 47.9. Job market confidence tempered its record-breaking surge while confidence in the housing market continued to sink, setting a new all-time low for the third straight reading with a decline of 3.3 points to 32.5. Confidence in the housing market has now fallen 18.7 points from its 2021 high.

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Consumers continue to hold mixed feelings about the state of the U.S. economy and their personal financial positions. Despite the May jobs report showing the U.S. economy added 559,000 people to payrolls, wage growth data is still muddied and home prices continue to increase for a range of reasons. Confidence in the U.S. economy was the sole indicator to rise over the past two weeks, increasing 2.6 points to 52.0, far below its March high of 56.6. The rest of the indicators declined:

– Confidence in the housing market fell 3.3 points to 32.5, a record low.

– Consumer confidence in the job market fell 1.8 points to 58.7. It’s the first decline since April, but still 19.0 points higher than sentiment in January.

Confidence in personal finances fell 0.8 points to 56.8.

Confidence in making a major purchase sank 0.7 points to 39.3, its lowest level since May 2020.

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The three-day moving average began on May 26 at 48.4. It rose to its peak of 50.1 on May 31, then steadily declined, closing at its low of 46.2 on June 8.

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The next release of the ESI will be Wednesday, June 23, 2021.

Consumer Confidence In The Job And Housing Markets Continue To Diverge With Record-Setting Readings

Overall economic sentiment fell again over the last two weeks, according to the HPS-CivicScience Economic Sentiment Index (ESI), dropping 1.4 points to 48.7. While job market confidence increased another 1.5 points to 60.5, an all-time high for the third reading in a row, housing market confidence tumbled 2.6 points to 35.8, a record low for the second consecutive reading.

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As COVID-19 restrictions dissipate, jobs are plentiful, but workers are not. Especially in lower-wage industries like hospitality, positions are widely available—but employers are struggling to fill them. On the other hand, intense demand and short supply are driving home prices to grow at the fastest pace in 15 years. These forces in the job and housing markets are tugging overall economic sentiment in polar opposite directions; the remaining three ESI indicators also display a mixed consumer confidence:

– Confidence in the U.S. economy dropped 2.6 points to 49.4.

– Consumer confidence in making a major purchase fell 3.6 points to 40.0, the lowest reading in 2021.

Confidence in personal finances ticked up 0.2 points to 57.6.

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The three-day moving average began on May 12 at 50.4 and declined for a week, hitting its low of 47.0 on May 19. It then rose to 51.0, its high this period, on May 24 and closed out at 49.9 on May 25.

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The next release of the ESI will be Wednesday, June 9, 2021.