2022 Begins With Continued Upward Push In Economic Sentiment

Economic sentiment rose again over the past few weeks, the latest positive development in a rally that began in late November of last year. The HPS-Civic Science Economic Sentiment Index (ESI) rose 0.5 points to 42.0.

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Four of the ESI’s five indicators rose over the past two weeks. Rising the most was confidence in personal finances, which rose 2.8 points to 57.9, followed by confidence in the overall U.S. economy, which rose 1.7 points to 40.3. Omicron news dominated the headlines over the past two weeks, generating mixed economic messages. Covid-related hospitalizations rose sharply in cities including New York and a growing list of companies announced they are pushing back plans for in-person work, raising concerns of a further delay in a return to “normal” economic activity. At the same time, however, widely-reported research indicated that Omicron is less likely than previous Covid strains to lead to health complications, particularly amongst vaccinated individuals. Here is how the ESI’s other indicators moved over the past two weeks:

– Confidence in the housing market rose 0.4 points to 28.8

– Confidence in making a major purchase rose 0.1 points to 28.8

– Confidence in finding a new job dropped 2.4 points to 54.4

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The ESI’s three-day moving average began this two-week stretch at 41.1 on December 22. It then rose following the Christmas holiday before quickly dropping to its session low of 40.9 on December 31. The moving average rose to begin the new year, reaching its two-week high of 43.7 on January 3 before closing out the session on January 4 at 41.5.

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The next release of the ESI will be Tuesday, January 18, 2022.

Economic Sentiment Continues Its Slow Rise

Consumer sentiment continued to inch upward over the past two weeks, with the HPS-CivicScience Economic Sentiment Index (ESI) increasing 0.5 points to 41.5, its highest position in two months.

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The increase in economic sentiment is due to robust gains in confidence in the job market and the overall U.S. economy. In the middle of the ESI’s reporting period, the Federal Reserve announced its intention to raise short-term bond rates three times next year to counteract inflation. Chairman Powell acknowledged that while the labor market hasn’t yet recovered to full employment, the job market continues to run hot. The ESI measured that over the past two weeks, consumer confidence in the job market increased 2.5 points to 56.8—the highest level in three months, and confidence in the overall U.S. economy shot up similarly, rising 2.4 points to a four-month high of 38.6. The other three ESI indicators fell slightly:

– Confidence in making a major purchase fell 0.8 points to 28.7

– Confidence in personal finances fell 0.3 points to 55.1

– Confidence in the housing market fell 1.2 points to 28.4

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The ESI’s three-day moving average began at its period low of 39.7 on December 8 and held a generally upward trajectory for most of the period. It reached its highest point of 42.4 on December 15 and again on December 17 before declining at the end of the period and closing out at 40.5 on December 21.

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The next release of the ESI will be Wednesday, January 5, 2022.

Economic Sentiment Claws Back Some Lost Ground

Economic sentiment ticked upward over the past two weeks, despite the Omicron variant emergence and turbulence in the stock market. The HPS-CivicScience Economic Sentiment Index (ESI) gained 0.5 points to reach 41.0, matching its position from four weeks ago.

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The ESI’s rise comes on the back of strong gains from two indicators: Confidence in personal finances jumped 2.3 points to 55.4, while confidence in the housing market rose 2.2 points to 29.6. The past two weeks witnessed the first reported case of the new Omicron variant of COVID-19 in the U.S., which, in conjunction with a mixed November jobs report, sent U.S. equities into a series of down-and-up jolts. New indicators also showed home prices decelerating their appreciation for the first time in two years. Here is how the ESI’s other indicators moved:

– Confidence in making a major purchase rose 1.6 points to 29.5

– Confidence in finding a new job dropped 1.8 points to 54.3

– Confidence in the overall U.S. economy dropped 1.9 points to 36.2

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The ESI’s three-day moving average began at 42.0 on November 24. After a brief dip, it reached its two-week high of 43.0 on November 28, remaining around that level before quickly dropping to its two-week low of 39.2 on December 4. It closed the session on December 7 at 40.5.

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The next release of the ESI will be Wednesday, December 22.

Consumer Sentiment Remains Near Historic Low

After a slight uptick last period, economic sentiment fell again over the past two weeks, declining 0.5 points to 40.5, according to the HPS-CivicScience Economic Sentiment Index (ESI). This reading marks the second-lowest in ESI history, following its all-time low of 40.1 last month. 

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This week’s reading indicates a divergence in consumer sentiment about their own finances versus the state of the overall economy. As Americans continue to grapple with a housing shortage, confidence in the housing market dropped 2.7 points to an all-time low of 27.4. Also driving this week’s decline in economic sentiment was falling confidence in personal finances, which fell 2.4 points to 53.1—likely a continued reflection of supply chain issues and inflation worries heading into the holiday season. On the other hand, confidence in the overall U.S. economy jumped to 38.1, a notable 3.9-point increase that may indicate rising optimism about the general economy—even if consumers aren’t feeling the same way about their own finances. Here’s how the other indicators moved:

– Confidence in making a major purchase dropped 0.8 points to 27.9

– Confidence in the job market dropped 0.2 points to 56.1

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The ESI’s three-day moving average began the period on November 10 at a steady 41.9 before falling and rising in two cycles. It hit its period high of 42.9 on November 16 and low of 38.6 three days later. The moving average closed out on an upswing, reaching 41.8 on November 23.

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The next release of the ESI will be Wednesday, December 8.

Economic Sentiment Recovers Slightly

Economic sentiment inched up over the past two weeks, on the heels of the passage of President Biden’s signature infrastructure deal in the House of Representatives. The HPS-CivicScience Economic Sentiment Index (ESI) rose 0.9 points to 41.0, only the second gain since early August. The ESI’s three-day moving average closed out on a four-day, 4.5-point jump following the passage of the infrastructure package.

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Driving this reading’s increase was a substantial recovery in confidence in making a major purchase, which rose 3.6 points to 28.7. The last two weeks saw the passage of the Infrastructure Investment and Jobs Act, clearing a logjam in President Biden’s agenda and releasing $550 billion in new federal investment. Yet optimism surrounding the recovery from COVID-19 continues to be tampered by supply chain and inflation concerns. On November 10, the day after this ESI period ended, the Labor Department reported that consumer prices skyrocketed in October, jumping 6.2% in the largest inflation surge in over 30 years. Here is how the ESI’s other indicators moved:

– Confidence in personal finances rose 1.2 points to 55.5

– Confidence in the housing market rose 0.3 points to 30.1

– Confidence in the overall U.S. economy dropped 0.4 points to 34.2

– Confidence in the job market dropped 0.2 points to 56.3

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The ESI’s three-day moving average began the period sluggishly, dropping from 39.6 on October 27 to its period low of 38.2 on October 28. The moving average recovered towards the middle of the period, then dropped again before closing out on a surge following the passage of the infrastructure bill, ending the period at its high of 42.9 on November 9.

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The next release of the ESI will be Tuesday, November 23.