Economic sentiment slightly decreases ahead of the August 1 tariff deadline

The latest biweekly reading of the Penta-CivicScience Economic Sentiment Index (ESI) decreased by 0.1 points from 34.4 to 34.3. This decrease was driven by a decline in confidence in the U.S. economy, which experienced its largest fall since February 2025.

Click to view image.

Two of the ESI’s five indicators decreased during this period. Confidence in the overall U.S. economy decreased the most, falling 2.5 points to 34.5.

—Confidence in buying a new home decreased 0.2 points to 25.4.
—Confidence in major purchases increased 0.3 points to 26.6.
—Confidence in finding a new job increased 0.6 points to 32.2.
—Confidence in personal finances increased 1.3 points to 52.8.

On July 23, Japan and the U.S. established a trade deal mandating reciprocal 15 percent tariffs. Japan also pledged $550 billion in investment in the United States. The agreement is part of a broader U.S. effort to finalize bilateral deals before the pause on President Donald Trump’s worldwide, “reciprocal” tariffs ends on August 1. Last week, the White House announced details of its trade agreement with Indonesia, specifying that imports from the country will face a 19 percent tariff and a 40 percent tariff on goods largely made with materials or components from other nations. In exchange, the majority of U.S. goods exported will not face any levies, and Indonesia agreed to lift various trade barriers currently in place. The U.S. also reached a trade deal with the Philippines which will impose a 19 percent tariff on imports from the country.

Additionally, on July 27, the U.S. announced a trade deal with the EU. Under the U.S.–EU agreement, a 15 percent tariff will apply to most European imports, reduced from the initially threatened 30 percent. In return, the United States committed to $750 billion in energy purchases, while the EU agreed to invest $600 billion in the United States, including in military equipment. Steel and aluminum imports from the EU will remain subject to a 50 percent tariff. Certain imports, including aircrafts, semiconductor equipment, and select pharmaceuticals are exempt from tariffs. While financial markets have responded positively and some observers credit the deals with preventing a trade war, critics in Europe have expressed concern about inflation risks and argue that the agreements create an uneven playing field tilted in favor of the United States.

The Commerce Department released June retail sales data which found that retail and food sales totaled $720.1 billion, marking a greater-than-expected 0.6 percent increase from the previous month, and a 3.9 percent increase from June 2024. Total sales from April to June 2025 increased 4.1 percent from the same period last year. Broken down by kind of business, retail trade sales increased 0.6 percent from May and 3.5 percent from the previous year. Nonstore retail sales grew 4.5 percent from the previous year, while food sales increased 6.6 percent.

Sales of new single-family homes rose 0.6 percent in June to a seasonally adjusted annual rate of 627,000 units, according to the U.S. Census Bureau and the Department of Housing and Urban Development. While the data does show an increase in new home sales, the increase fell short of economists’ expectations, with higher mortgage rates pushing inventory to levels last seen in late 2007. Meanwhile, data from the National Association of Realtors (NAR) showed that sales of existing homes decreased 2.7 percent in June, with the median existing-home price for the month rising 2 percent year-over-year to $435,300, its highest level ever.

Click to view image.

The ESI’s three-day moving average began the two-week stretch at 35.3 on July 16. It then decreased, falling to a low of 32.9 on July 21 before trending up to a high of 35.5 on July 28. Finally, the three-day moving average fell to 33.8 on July 29 to close out the session.

Click to view image.

The next release of the ESI will be on Wednesday, August 13, 2025.

Economic sentiment picks up after three consecutive drops

The latest biweekly reading of the Penta-CivicScience Economic Sentiment Index (ESI) increased by 1.0 points from 33.4 to 34.4, recovering after three consecutive periods of declines.

Click to view image.

Four of the ESI’s five indicators increased during this period. Confidence in making a major purchase increased the most, rising 2.1 points to 26.3.

—Confidence in finding a new job increased 1.9 points to 31.6.
—Confidence in buying a new home increased 1.1 points to 25.6.
—Confidence in the overall U.S. economy increased 0.5 points to 37.0.
—Confidence in personal finances decreased 0.8 points to 51.5.

On July 15, the Bureau of Labor Statistics released the Consumer Price Index (CPI) report for June, showing a 0.3 percent increase in overall inflation and a 0.2 percent rise excluding food and energy. This follows a 0.1 percent monthly increase in all items reported for May. Year-over-year, the CPI increased 2.7 percent, following May’s 2.4 percent increase. These numbers were in line with economists’ predictions and mark the highest yearly inflation rate since February. The index for shelter rose 0.2 percent in June and was the primary factor in the rise in monthly CPI. Meanwhile, the energy index rose 0.9 percent, and the food at home index increased 0.3 percent.

On July 2, President Donald Trump announced on Truth Social that the U.S. had reached a trade deal with Vietnam. The deal imposed a 20 percent tariff on Vietnamese goods and a 40 percent tariff on goods that originated in a different country. In exchange, the U.S. goods will not face a tariff in Vietnam. A final version of the deal has yet to be released.

On July 7, President Trump delayed implementation of the “reciprocal” tariffs until August 1. This decision came amid the president’s threat of an additional 10 percent tariff to “Any Country aligning themselves with the Anti-American policies of BRICS,” and his announcement that many countries—such as Japan and South Korea—will be subject to adjusted, often higher, tariffs starting August 1. The president has subsequently introduced additional tariff measures on other nations starting August 1, including a 35 percent tariff on Canada and a 30 percent tariff on goods from both the EU and Mexico. Following these announcements, on July 15, President Trump posted that the U.S. has reached a trade deal with Indonesia, with details forthcoming.

On July 3, the Bureau of Labor Statistics released its June Jobs Report, showing that total nonfarm payroll employment increased by 147,000 jobs while the unemployment rate ticked down 0.1 percentage points to 4.1 percent. These gains were well above the 110,000 jobs predicted by economists polled by the Wall Street Journal. The top sectors for employment increases were state government and health care, while job losses were largely from the federal government.

Click to view image.

The ESI’s three-day moving average began the two-week stretch at a low of 29.8 on July 2. It then increased, rising to a high of 35.9 on July 6 before falling to 33.9 on July 9. It remained steady at 33.9 on July 10 before rising to 35.7 on July 12. The three-day moving average then oscillated and ultimately fell to 34.2 to close out the session.

Click to view image.

The next release of the ESI will be on Wednesday, July 30, 2025.

Economic sentiment slightly declined at the end of Q2

The latest biweekly reading of the Penta-CivicScience Economic Sentiment Index (ESI) declined by 0.3 points from 33.7 to 33.4, marking a small dip in overall confidence over the past two weeks.

Click to view image.

Three of the ESI’s five indicators decreased during this period. Confidence in making a major purchase decreased the most, falling 1.8 points to 24.2.

—Confidence in buying a new home decreased 1.6 points to 24.5.

—Confidence in finding a new job decreased 1.3 points to 29.7.

—Confidence in personal finances increased 0.8 points to 52.3.

—Confidence in the overall U.S. economy increased 2.4 points to 36.5.

The Federal Reserve left interest rates unchanged at between 4.25 and 4.5 percent at the June Federal Open Markets Committee (FOMC) meeting, marking the fourth meeting in a row that it held rates steady. In its statement, the FOMC said  “uncertainty about the economic outlook has diminished but remains elevated” amid persistent inflation, solid economic growth, strong labor market conditions, and a low unemployment rate. In its Summary of Economic Projections, the FOMC signaled that interest rate cuts are still on the table, with eight officials anticipating two cuts by the end of 2025. Later in June, Fed Chair Jerome Powell told the House Financial Services Committee that he expects inflation to begin rising soon due to higher tariff rates and that the Fed is going to continue monitoring tariff impacts before cutting rates again.

The Bureau of Economic Analysis revised its estimate for this year’s first quarter real GDP down even further in its third estimate, showing that the U.S. economy shrank at an annual rate of 0.5 percent, in contrast to the 2.4 percent increase in GDP during the fourth quarter of 2024. The BEA cited a decline in net exports as the primary driver in the decrease in real GDP, likely the result of higher expected tariff rates, as well as a decrease in government spending.

Separately, on June 30, the BEA found that the U.S. net international investment position for the first quarter of 2025 was -$24.61 trillion, an improvement of $1.92 trillion from -$26.54 trillion during the fourth quarter of 2024. This change was attributed to financial transactions, as well as changes in prices and exchange rates due to the appreciation of foreign currencies against the U.S. dollar. The U.S. dollar has declined in value by 10.7 percent relative to other major currencies this year, the weakest start to a year since the U.S. left the gold standard in 1973. This has occurred in part due to uncertainty over U.S. tariff policy and decreased investor confidence in the dollar as the world’s reserve currency.

The U.S. Census Bureau reported that sales of new single-family houses in May 2025 decreased 13.7 percent month-over-month, down from 722,000 in April to 623,000 in May. This data comes in below the 695,000 sales predicted by economists polled by the Wall Street Journal and reflects a year-over-year decline of 6.3 percent. Meanwhile, the National Association of Realtors (NAR) reported that U.S. existing home sales in May increased 0.8 percent from April while year-over-year sales declined 0.7 percent. NAR Chief Economist Lawrence Yun attributed the “subdued sales” to “persistently high mortgage rates.”

Click to view image.

The ESI’s three-day moving average began the two-week stretch at 33.6 on June 18. It then climbed to 34.7 on June 19, then oscillated between rising and falling before decreasing to its lowest point of 32.6 on June 26. The three-day moving average then climbed to a high of 35.1 on June 29 before falling to 32.8 on July 1 to close out the session.

Click to view image.

The next release of the ESI will be on Wednesday, July 16, 2025.

Economic sentiment holds fairly steady

The latest biweekly reading of the Penta-CivicScience Economic Sentiment Index (ESI) declined slightly by 0.1 points from 33.8 to 33.7, marking a minor dip in overall confidence over the past two weeks.

Click to view image.

Two of the ESI’s five indicators decreased during this period. Confidence in the overall U.S. economy decreased the most, falling 1.0 points to 34.1.

—Confidence in personal finances decreased 0.7 points to 51.5.

—Confidence in buying a new home increased 0.4 points to 26.1.

—Confidence in making a major purchase increased 0.5 points to 26.0

—Confidence in finding a new job increased 0.7 points to 31.0.

The May Consumer Price Index showed that inflation rose 0.1 percent during the month, cooling slightly after rising 0.2 percent in April. Year-over-year inflation increased 2.4 percent. The Bureau of Labor Statistics (BLS) stated that shelter was “the primary factor in the all items monthly increase,” rising 0.3 percent in May. Meanwhile, energy declined 1.0 percent during the month, primarily driven by declining gas prices. Separately, BLS told economists that staffing shortages forced the agency to rely more heavily on less precise price estimation methods for April’s data. The Wall Street Journal reported that these staffing shortages have led economists to question the “quality of recent and coming inflation reports.”

The May Jobs Report showed that the economy added 139,000 jobs last month, while the unemployment rate remained unchanged at 4.2 percent. While the jobs data reflects a slowdown in hiring from April—where the economy added a revised 147,000 jobs—these gains were higher than the 125,000 jobs predicted by analysts polled by the Wall Street Journal. However, the employment-to-population ratio fell to 59.7 percent, its lowest point since January 2022. BLS attributes May job growth to gains in health care, leisure and hospitality, and social assistance.

President Donald Trump doubled tariffs on aluminum and steel on June 3, increasing the levy from 25 percent to 50 percent. The President stated in an executive order that “the increased tariffs will more effectively counter foreign countries that continue to offload low-priced, excess steel and aluminum in the United States market and thereby undercut the competitiveness of the United States steel and aluminum industries.” 

New data from the Bureau of Economic Analysis showed that the U.S. trade deficit declined in April to $61.6 billion. Bloomberg reported that this marks the trade deficit’s lowest level since 2023 and represents a 55 percent decline from March, where the deficit hit $138.3 billion ahead of President Trump’s “Liberation Day.” An analysis from the Congressional Budget Office (CBO) found that new U.S. tariffs announced prior to May 13 would reduce the deficit by $2.8 trillion after adjusting for their tariffs’ negative impact on growth. CBO also finds that the tariffs would increase inflation by 0.4 percentage points in 2025 and 2026. 

On June 10, the World Bank slashed U.S. growth projections in half for 2025, projecting an expansion of just 1.4 percent, a substantial decline from the 2.8 percent growth that the U.S. economy experienced in 2024. The World Bank warned that if the 90-day pause of the “Liberation Day” tariffs expires on July 31 and the “reciprocal” tariffs come into effect, that it would result in “global trade seizing up in the second half of this year” and that it would be “accompanied by a widespread collapse in confidence, surging uncertainty, and turmoil in financial markets.”

Click to view image.

The ESI’s three-day moving average began the two-week stretch at 33.6 on June 4 and then climbed to a high of 35.6 on June 7. It then fell to 32.8 on June 10 before briefly climbing up to 34.5 on June 12. The three-day moving average then fell again, hitting a low of 31.9 on June 16 before rising to 32.7 on June 17 to close out the session.

Click to view image.

The next release of the ESI will be on Wednesday, July 2, 2025.

Economic sentiment declines slightly following last period’s large surge 

The Penta-CivicScience Economic Sentiment Index (ESI) decreased by 0.4 points to 33.8, marking a slight decline after a significant gain in the previous two-week period.

Click to view image.

Three of the ESI’s five indicators decreased during this period. Confidence in finding a new job decreased the most, falling 2.6 points to 30.3.

—Confidence in the overall U.S. economy decreased 0.8 points to 35.1.
—Confidence in making a major purchase decreased by 0.6 points to 25.5.
—Confidence in buying a new home increased 0.7 points to 25.7.
—Confidence in personal finances increased 1.3 points to 52.2.

On May 28, the U.S. Court of International Trade ruled that some of President Donald Trump’s “retaliatory” tariffs were illegal. However, less than 24 hours later, an appeals court paused that decision and is weighing the appeal. Until then, the tariffs that were part of the ruling, including the levies imposed on Mexico, Canada, and China for their alleged involvement in the fentanyl trade and the global tariffs paused in April, will remain in effect. Commerce Secretary Howard Lutnick stated that the “tariffs are not going away,” and that President Trump has multiple avenues not affected by that court ruling through which to impose tariffs.

Despite this, President Trump is moving forward with his tariff policies, with the tariff on foreign steel and aluminum set to rise to 50 percent on June 4, and a planned 50 percent tariff on European Union imports delayed until July 9 following a conversation with European Commission President Ursula von der Leyen.

As global economic pressures mount, the Organisation for Economic Co-operation and Development (OECD) has cut its U.S. growth forecast to 1.6 percent for 2025 and 1.5 percent for 2026, down from a 2.2 percent increase forecasted in March. The downgrade reflects the impact of U.S. tariffs, persistent policy uncertainty, and a shrinking labor force. In parallel, inflation is expected to rise to 3.2 percent, potentially nearing 4 percent by year-end. Still, the OECD notes that if trade barriers ease and investment rebounds, AI-driven productivity gains could position the U.S. for stronger long-term growth.

The Bureau of Economic Analysis (BEA) released its second estimate of gross domestic product (GDP) for the first quarter of 2024 showing that the overall U.S. economy shrank at an inflation-adjusted annual rate of 0.2 percent. This is an upward revision from the initial estimate which showed a 0.3 percent decline in GDP. Consumer spending in the first quarter was lower than initially reported, increasing only 1.2 percent rather than the initial estimate of 1.8 percent. 

Additionally, the BEA’s latest personal consumption expenditures (PCE) price index showed that inflation, excluding volatile food and energy prices, increased 0.1 percent in April and 2.1 percent year-over-year. This represents a continued deceleration as core PCE increased 2.6 year-over-year from February and then 2.3 from March. The report also indicated increased caution among consumers due to ongoing uncertainty with U.S. trade policies as consumer spending fell to only a 0.2 percent increase month-over-month and as personal savings jumped to 4.9 percent, the highest level in almost a year.

Click to view image.

The ESI’s three-day moving average began the two-week stretch at 34.0 on May 21, oscillating down and up before falling to a low of 32.5 on May 28. The ESI then began rising, hitting a high of 34.5 on June 1, before falling again, declining to 33.5 on June 4 to close out the session.

Click to view image.

The next release of the ESI will be on Wednesday, June 18, 2025.