Economic Sentiment Drops To Another Record Low

Economic sentiment fell over the last two weeks, dropping below the previous all-time low by a 1.3 point margin. From reading to reading, the HPS-CivicScience Economic Sentiment Index (ESI) decreased 1.5 points to 34.5.

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For the second straight time, all but one of the five indicators decreased. Confidence in buying a new home fell 1.4 points to 19.3, a new record low, while confidence in the U.S. economy dropped 2.9 points to an all-time low of 31.6.

— Confidence in finding a new job fell 0.3 points to 49.8.

— Confidence in personal finances fell 2.9 points to 50.6.

The only indicator to improve was confidence in making a major purchase, which rose 0.4 points to 21.4.

Last week, Chairman Jerome Powell announced that the Federal Reserve would hike its benchmark interest rate by 50 basis points in response to inflation and the “hardship it is causing.” Chairman Powell indicated, however, that the Fed is not “actively considering” raising rates by 75 basis points.

This week, the S&P 500 fell below 4,000 for the first time since March of 2021, and the 10-year Treasury yield rose above 3% for the first time since 2018. The tech-heavy Nasdaq is also officially in bear market territory, as stocks like Meta, Alphabet, Amazon, Apple, and Netflix have seen their values fall. 

The Labor Department released its monthly jobs report for April last week, which indicated that while 428,000 net new jobs were added to the economy and unemployment remained at 3.8%, the labor participation rate fell by 0.2 percentage points to 62.2%.

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The ESI’s three-day moving average began this two-week stretch at 35.6 on April 27. It hit its two-week high of 36.0 the following day and its low of 33.1 on May 4. The three-day moving average closed the session at 35.7 on May 10.

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The next release of the ESI will be Wednesday, May 25, 2022.

Economic Sentiment Falters, Driven By Concerns Over Housing Affordability

Economic sentiment fell over the last two weeks, marking the fifth decline out of the last six readings. The HPS-CivicScience Economic Sentiment Index (ESI) decreased 0.7 points to 36.0.

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All but one of the ESI’s five indicators decreased this week. Confidence in buying a new home declined the most, falling 1.7 points to 20.7, a new record low.

— Confidence in making a major purchase fell 1.4 points to 21.0.

— Confidence in finding a new job fell 0.6 points to 50.1.

— Confidence in the U.S. economy fell 0.4 points to 34.5.

The only indicator to improve was confidence in personal finances, which rose 0.4 points to 53.5. 

Last week, Goldman Sachs analysts raised their projected probability of recession to 15% in the next 12 months and 35% within the next 24 months. The heightened risk is attributed to expectations that the Fed will further raise interest rates as a means of reining in inflation and cooling the economy.

New data released this week showed average national home prices reached an all time high in February, increasing 19.8% year over year. Fortune reported last week that homebuyers paid 20% more for a standard 30-year mortgage than homebuyers in January and 38% more than a year ago. 

Homebuyers are flocking to smaller cities with lower costs of living, a sign that housing affordability is becoming a higher priority. The Rapid City, South Dakota metro area ranked highest in the Wall Street Journal’s emerging housing markets index for Q1 2022. 

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The ESI’s three-day moving average began this two-week stretch at 37.9 on April 13. It hit its two-week high of 38.3 on April 17, its low of 33.6 on April 21, and closed the session at 35.2 on April 26.

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The next release of the ESI will be Wednesday, May 11, 2022.

Economic Sentiment Recovers Slightly, Finally Breaking Its Free Fall

Economic sentiment rose slightly over the past two weeks, after dropping to record-lows for each of three consecutive prior readings. The HPS-CivicScience Economic Sentiment Index (ESI) increased 0.9 points to 36.7.

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All but one of the ESI’s five indicators increased this week. Confidence in personal finances and confidence in making a major purchase experienced the greatest gains, rising 2.4 points to 53.1, and 1.5 points to 22.4, respectively.

— Confidence in finding a new job rose 0.9 points to 50.7.

— Confidence in the U.S. economy rose 0.2 points to 34.9.

The only indicator to decrease was confidence in the housing market, which fell 0.6 points to a new record low of 22.4. 

Yesterday, the U.S. Labor Department reported a March Consumer Price Index (CPI) increase of 8.5%, exceeding Dow Jones estimates of a 8.4% jump. The agency also reported initial jobless claims fell to 166,000, their lowest level since 1968. At present, there are over 5 million more employment openings than available workers in the country.

Rising interest rates are permeating the housing market, which is currently digesting the unusual combination of rising home prices and rising mortgage rates; last week, the 30-year fixed-rate home loan increased to 4.72%, the highest figure since December of 2018. According to mortgage-financier Freddie Mac, the rate rose 1.5 percentage points over the past 90 days, the quickest three-month increase since 1994.

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The ESI’s three-day moving average began this two-week stretch at 37.0 on March 30. It hit its two-week high of 38.8 on April 4, its low of 33.5 on April 9, and closed the session at 37.8 on April 12.

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The next release of the ESI will be Wednesday, April 27, 2022.

Economic Sentiment Hits Record Low For Third Consecutive Reading

Economic sentiment declined to a record low for the third consecutive reading, amidst persistent inflation concerns and the continuation of Russia’s war against Ukraine. The HPS-CivicScience Economic Sentiment Index (ESI) dropped 0.5 points to 35.8.

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 Three of the ESI’s five indicators reached new all-time lows this week:

— Confidence in personal finances fell 1.6 points to an all time low of 50.7.

— Confidence in purchasing a new home fell 1.6 points to an all time low of 23.0.

— Confidence in making a major purchase fell 0.4 points to an all time low of 20.9.

Additionally, confidence in getting a new job fell 1.8 points to 49.8. The only indicator to rise this week was confidence in the overall U.S. economy, which rose 3.1 points to 34.7.

Inflation and Russia’s invasion of Ukraine continue to drive the news cycle. Americans are more worried about inflation than at any point since 1985, with 17% of respondents in a recent poll calling inflation the “nation’s most important problem.” The consequences of the situation in Ukraine, meanwhile, are becoming apparent across the economy, from spiking fertilizer costs to the cost of fuel. Gas prices in the U.S. remained above $4.20 per gallon for the past three weeks, leading to discussions within the Biden administration and Congress of the potential for direct cash relief in the form of gas rebates. 

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The ESI’s three-day moving average began this two-week stretch at 37.1 on March 16. It hit its two-week low of 34.4 on March 20, and closed the session at 36.2 on March 29.

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The next release of the ESI will be Wednesday, April 13, 2022.

Economic Sentiment Hits New Record Low

Economic sentiment continued to fall over the past two weeks amid concerns about inflation and the economic impact of Russia’s invasion of Ukraine. The HPS-CivicScience Economic Sentiment Index (ESI) dropped 1.8 points to 36.3, its lowest recorded reading since it began measuring economic sentiment in 2013.

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All five ESI indicators fell for the second consecutive reading, with three indicators reaching their all-time lows:

— Confidence in the overall U.S. economy dropped 2.7 points to 31.6

— Confidence in making a major purchase fell 2.5 points to 21.3

— Confidence in purchasing a new home fell 0.6 points to 24.6

Confidence in personal finances experienced the biggest drop, falling 2.9 points to 52.3, while confidence in finding a new job fell 0.5 points to 51.6.

The Ukraine-Russia conflict continues to dominate headlines, as Western-imposed sanctions on Putin’s regime threaten to further disrupt supply chains and increase global commodity prices. Russia accounts for 14% of coal, 7.5% of iron and steel, 28% of nickel, and 10% of aluminum worldwide exports. President Biden announced the United States will cut off oil imports from Russia, generating concerns over the cost of energy and increased inflationary pressure.

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The ESI’s three-day moving average began this two-week stretch at 38.7 on March 2. It hit its two-week low of 33.5 on March 13 and closed the session at 36.1 on March 15.

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The next release of the ESI will be Wednesday, March 30, 2022.