Economic sentiment decreases slightly to close out 2024

The latest biweekly reading of the Penta-CivicScience Economic Sentiment Index (ESI) decreased by 0.3 points to 40.8, marking a minor dip in overall economic confidence ahead of the new year.

Click here to view image.

Three of the ESI’s five indicators decreased during this period. Confidence in the overall U.S. economy decreased the most, falling 3.6 points to 46.5. This marks the third period in a row this indicator has fallen by more than 3 points.

—Confidence in making a major purchase decreased 0.7 points to 29.5.
—Confidence in personal finances decreased 0.2 points to 59.1.
—Confidence in buying a new home increased 0.1 points to 24.8.
—Confidence in finding a new job increased 2.7 points to 44.0.

The Federal Reserve reduced interest rates by 25 basis points to between 4.25 and 4.5 percent, marking the third consecutive rate cut this year. Members of the Federal Open Markets Committee had previously expected four rate cuts in 2025 but are now projecting only 50 basis points of cuts next year. Additionally, Fed officials raised their forecasts for inflation next year to 2.5 percent, up from their previous estimate of 2.1 percent, signaling that price pressures remain stubbornly elevated above the Fed’s 2 percent inflation target. 

The Commerce Department reported that retail sales rose by 0.7 percent in November, up from October’s 0.5 percent increase, signaling resilient consumer spending as the holiday shopping season begins. Gains were driven largely by auto sales, which surged 2.6 percent, while online retailers saw a 1.8 percent boost. However, signs of caution emerged as sales dipped at grocery stores, restaurants, and clothing shops. The steady spending reflects an economy growing at a healthy pace despite higher interest rates, though it may prompt the Federal Reserve to slow its approach to rate cuts next year.

The U.S. Bureau of Labor Statistics released the November Consumer Price Index (CPI) report, which showed that consumer prices increased 0.3 percent in November and have risen 2.7 percent annually. This represents the CPI’s largest month-over-month increase since April 2023. The Bureau highlighted that nearly 40 percent of the increase can be attributed to rising shelter costs, which rose 0.3 percent in November. The Bureau also reported that food and energy prices increased month-over-month, rising 0.4 percent and 0.2 percent, respectively.

The November Jobs Report showed that the economy added 227,000 jobs last month, rebounding from October, where only 24,000 jobs were added after revisions. The unemployment rate ticked up to 4.2 percent from 4.1 percent last month. The Bureau reported that this represents an increase in employment across the healthcare, leisure and hospitality, government, and social assistance sectors and also noted that manufacturing jobs rebounded this month following the end of the Boeing strike.

Click here to view image.

The ESI’s three-day moving average began this two-week stretch at 40.8 on December 4. It then oscillated between increasing and decreasing before rising up to a high of 42.3 on December 9. The three-day moving average then decreased, falling to a low of 39.0 on December 13, and then trended upward to 41.1 on December 17 to close out the session.

Click here to view image.

Due to the New Year’s holiday, the next release of the ESI will be on Wednesday, January 15, 2025.

Economic sentiment decreases slightly following Thanksgiving

The latest biweekly reading of the Penta-CivicScience Economic Sentiment Index (ESI) decreased by 0.2 points to 41.1, marking a minor dip in overall economic confidence as the holiday shopping season begins.

Click here to view image.

Three of the ESI’s five indicators decreased during this period. Confidence in the overall U.S. economy decreased the most, falling 3.4 points to 50.1. This marks the second period in a row this indicator has fallen by more than 3 points.

—Confidence in personal finances decreased 2.9 points to 59.3.
—Confidence in finding a new job decreased 1.0 points to 41.3. 
—Confidence in making a major purchase increased 3.2 points to 30.2.
—Confidence in buying a new home increased 3.2 points to 24.7.

The Commerce Department’s second estimate of U.S. third quarter GDP remained unrevised from the advance estimate released in early November, showing that the U.S. economy expanded at an annual pace of 2.8 percent. This marks the ninth consecutive quarter that GDP growth exceeded 2 percent.

Meanwhile, the Commerce Department released the October personal consumption expenditures (PCE) price index which showed that inflation excluding volatile food and energy prices increased by 0.3 percent from September to October and 2.8 percent year-over-year. This represents a minor acceleration from September, where core PCE increased 2.7 percent year-over-year. This data points to the stickiness of inflation and raises questions about whether the Federal Reserve will continue to cut rates in December as its preferred inflation metric remains stubbornly above their 2 percent target.

The National Association of Realtors (NAR) reported that home sales in October increased 3.4 percent from September, reflecting a short-term drop in mortgage rates. While NAR Chief Economist Lawrence Yun stated that, “the worst of the downturn in home sales could be over, with increasing inventory leading to more transactions,” he also affirmed that “we are not going to return to 3 percent, 4 percent, or 5 percent mortgage-rate conditions” and that “the new normal will be around 6 percent.” Economists at Wells Fargo are projecting that rates will average around 6.3 percent by the end of next year, and Fannie Mae is estimating an average of 6.4 percent in 2025.

Click to view image.

The ESI’s three-day moving average began this two-week stretch at 41.3 on November 20. It then fell slightly to 40.9 on November 23 before increasing back up to a high of 43.2 on November 26. The three-day moving average then fell back down to 40.9 on November 28, then rose to 42.6 on December 1 before decreasing to a low of 40.0 on December 3 to close out the session.

Click to view image.

The next release of the ESI will be on Wednesday, December 18, 2024.

Economic sentiment remains fairly steady

The latest biweekly reading of the Penta-CivicScience Economic Sentiment Index (ESI) decreased by 0.1 point to 41.3, marking a minor dip in overall economic 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 3.2 points to 53.5.

—Confidence in buying a new home decreased 1.3 points to 21.5.

—Confidence in finding a new job remained flat at 42.3.

—Confidence in making a major purchase increased 0.9 points to 27.0.

—Confidence in personal finances increased 3.1 points to 62.2.

The Federal Reserve reduced interest rates by 25 basis points on November 7, lowering the target federal funds rate to between 4.5 and 4.75 percent. This marks the second rate cut of 2024, reflecting the Federal Open Markets Committee’s belief that inflation is nearing the Fed’s 2 percent goal. In its statement, the FOMC said that “the risks to achieving its employment and inflation goals are roughly in balance.”

The Fed is also navigating uncertainty following Donald Trump’s election as president, as potential shifts in fiscal, trade, and immigration policies could influence future inflation and growth trajectories. Fed Chair Jerome Powell affirmed that immediate policy decisions would not account for speculative political changes, stating, “in the near term, the election will have no effects on our policy decisions.”

The U.S. Bureau of Labor Statistics released the October Consumer Price Index (CPI) report, showing annual inflation rising to 2.6 percent, a modest increase from September’s 2.4 percent, while the core CPI that excludes food and energy prices rose 3.3 percent over the past year. Both figures aligned with economists’ expectations and reflected mixed inflationary pressures. Shelter costs, responsible for over half of the CPI’s overall increase, rose 0.4 percent in October and 4.9 percent year-over-year, remaining a substantial inflation driver.

Retail sales rose by 0.4 percent in October, matching September’s revised gain, bringing total sales to $718.9 billion, according to the U.S. Census Bureau. Compared to October of last year, sales increased by 2.8 percent. The advance report indicates a steady consumer sector, and economists expect decent continued growth over the holiday shopping season.

Click to view image.

The ESI’s three-day moving average began this two-week stretch at 42.6 on November 6. It then fell to a low of 40.0 on November 9, oscillated slightly, and then rose to a high of 42.4 on November 15. The three-day moving average then decreased to 41.0 on November 18 before rising up to 42.0 on November 19 to close out the session.

Click to view image.

The next release of the ESI will be on Wednesday, December 4, 2024.

Economic sentiment continues to rise into Election Day

Economic sentiment increased to its highest level in over a year, driven by an over five-point jump in confidence in the U.S. economy. The latest biweekly reading of the Penta-CivicScience Economic Sentiment Index (ESI) increased by 1.1 points to 41.4.

Click to view image.

Three of the ESI’s five indicators increased during this period. Confidence in the overall U.S. economy increased the most, rising 5.5 points to 56.7. This marks this indicator’s largest increase since July.

—Confidence in finding a new job increased 0.6 points to 42.3. 
—Confidence in buying a new home increased 0.2 points to 22.8.
—Confidence in personal finances decreased 0.1 points to 59.1.
—Confidence in making a major purchase decreased 0.4 points to 26.1.

The U.S. Commerce Department released its advanced estimate of GDP, stating that real GDP increased 2.8 percent in the third quarter of 2024. This represents a slight deceleration from the second quarter of 2024, where real GDP increased 3%. Personal consumption expenditures, a proxy for consumer spending, rose by 3.7% for the quarter—adding 2.46 percentage points to the overall GDP.

Meanwhile, the Bureau of Labor Statistics released the October Jobs Report which showed that the economy added only 12,000 jobs in the month, representing the weakest job growth since December 2020. Meanwhile, the unemployment rate remained unchanged at 4.1 percent. The Bureau noted that the now-concluded strike at Boeing led to a decline of 44,000 jobs in transportation equipment manufacturing and also acknowledged the potential effects of Hurricanes Helene and Milton, stating, “It is likely that payroll employment estimates in some industries were affected by the hurricanes; however, it is not possible to quantify the net effect on the over-the-month change in national employment, hours, or earnings estimates.” 

Meanwhile, economists are predicting that the Federal Reserve will cut interest rates by a quarter percentage point on November 7. This meeting follows the release of the September personal consumption expenditures (PCE) price index from the Bureau of Economic Analysis which increased by 2.1% from September of last year. This data reflects continued progress toward steadying inflation near the Federal Reserve’s 2% target.

Click to view image.

The ESI’s three-day moving average began this two-week stretch at 42.2 on October 23. It then fell to a low of 39.7 on October 26 before rising to 42.8 on October 30. The three-day moving average then decreased to 39.9 on November 1 before rising up to a high of 44.7 on November 5 to close out the session.

Click to view image.

The next release of the ESI will be on Wednesday, November 20, 2024.

Economic sentiment rises to its highest level in over a year

Economic sentiment posted a huge increase this period, rising to its highest point in over a year. The latest biweekly reading of the Penta-CivicScience Economic Sentiment Index (ESI) increased by 2.3 points to 40.3, driven by a huge jump in confidence in finding a new job.

Click to view image.

All five of the ESI’s indicators increased during this period. Confidence in finding a new job increased the most, rising 6.2 points to 41.7. This marks this indicator’s largest increase since June 2020.

—Confidence in the overall U.S. economy increased 2.1 points to 51.2. 
—Confidence in personal finances increased 1.4 points to 59.2.
—Confidence in making a major purchase increased 1.0 points to 26.5.
—Confidence in buying a new home increased 0.7 points to 22.6.

The International Monetary Fund released its World Economic Outlook on October 22, which predicted that the U.S. economy will grow by 2.8% in 2024 and 2.2% in 2025. These predictions are 0.2 and 0.3 percentage points higher than the IMF previously projected in July 2024, respectively. 

Neel Kashkari, President of the Minneapolis Fed, stated in a speech to the Central Bank of the Argentine Republic that further rate cuts are likely to occur in the U.S. Kashkari said, “As of right now, it appears likely that further modest reductions in our policy rate will be appropriate in the coming quarters to achieve both sides of our mandate.” Kashkari also pointed to other positive economic metrics, affirming that the U.S. is still on target to its goal of reducing inflation to 2% and that job growth remains strong.

The U.S. Commerce Department reported that retail sales rose 0.4% from August to September and 1.7% from September 2023. This represents this indicator’s third straight increase and points to continued, robust consumer spending in the U.S.

Meanwhile, the U.S. Bureau of Labor Statistics released the September Consumer Price Index (CPI), showing that core inflation—the index excluding volatile food and energy costs—rose 0.3% in September and 3.3% over the last year. Both readings were 0.1 percentage points higher than economists’ forecasts. Despite this reading, Chicago Fed President Austan Goolsbee stated, “The overall trend is what’s important, not the day to day fluctuations…The overall trend over 12, 18 months is clearly that inflation has come down a lot, and the job market has cooled to a level which is around where we think full employment is.”

Click to view image.

The ESI’s three-day moving average began this two-week stretch at a low of 37.3 on October 9. It then rose up to 39.5 on October 11 before falling to 37.7 on October 14. The three-day moving average then rose up to 41.5 on October 16 and decreased back down to 39.9 on October 18 before rising to a high of 42.5 on October 21. It then fell back down to 41.3 on October 22 to close out the session.

Click here to view image.

The next release of the ESI will be on Wednesday, November 6, 2024.