Economic sentiment falls for first time since October 2022

Economic sentiment decreased slightly in the first full reading of 2023. The Penta-CivicScience Economic Sentiment Index (ESI) fell 0.3 points to 35.2 in its most recent reading.

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Three of the ESI’s five indicators decreased over the past two weeks. Confidence in buying a new home fell the most, dropping 1.5 points to 21.2.

–Confidence in finding a new job fell 1.2 points to 41.5.

–Confidence in making a major purchase fell 0.2 to 21.3.

–Confidence in personal finances rose 0.9 points to 56.3

–Confidence in the U.S. economy rose 1.0 points to 36.0.

Confidence in buying a new home fell as mortgage rates rose compared to one year ago. The average rate for a 30-year fixed-rate mortgage was 6.48% for the week ending January 5, a significant increase from the average rate of 3.22% last January. High interest and mortgage rates have been accompanied by lower demand, with mortgage applications for the week of January 4 44% lower than a year prior. 

Confidence in the overall U.S. economy rose as the consumer price index fell 0.1% in December 2022, the largest month-over-month decrease since April 2020. However, a steep drop in the price of gasoline drove most of the monthly decline, and when excluding volatile food and energy prices, core CPI rose 0.3% month-over-month. 

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The ESI’s three-day moving average began this two-week stretch at 35.6 on January 4. It rose slightly to 35.7 on January 5 before falling to a low of 33.6 on January 9. The three-day average then trended upward to a peak of 37.6 on January 16, before falling to 36.4 on January 17 to close out the session.

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The next release of the ESI will be Wednesday, February 1, 2023.

Economic sentiment remains steady heading into 2023

Economic sentiment remained steady over the holiday period and into the new year. The Penta-CivicScience Economic Sentiment Index (ESI) stayed at 35.5 in its most recent reading, after increasing steadily between the beginning of October and mid-December.

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Two of the ESI’s five indicators decreased over the past two weeks. Confidence in the US economy fell the most, dropping 2.1 points to 34.8, its third decrease in a row as we enter into the new year.

–Confidence in personal finances fell 0.9 points to 55.4, its first decrease since early October.
–Confidence in making a major purchase rose 0.1 to 21.5.
–Confidence in finding a new job rose 1.1 points to 42.7.
–Confidence in buying a new home rose 1.5 points to 22.7, its highest level since September.

Confidence in the US economy fell as a variety of economic projections released at the end of the year predict a rocky 2023: experts predict one third of the world economy will be in recession in the coming year. This projection comes alongside the International Monetary Fund’s forecast for slowing economic growth, with global GDP growth expected to drop from 3.2% to 2.7% in 2023.

Confidence in finding a new job rose ahead of the Labor Department’s December jobs report, which is due to be released this Friday. The report is likely to reflect an increase of 200,000 jobs and comes alongside the release of the Fed’s readout of its December meeting, which is expected to provide insight into future interest rate hikes.

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The ESI’s three-day moving average began this two-week stretch at 34.7 on December 21. It rose to a peak of 38.0 on December 26 before falling to a low of 33.6 on December 29. The three-day average then trended upward to 36.0 on January 1, before rising to 36.3 on January 3 to close out the session.

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The next release of the ESI will be Wednesday, January 18, 2023.

Economic sentiment rises as inflation continues to cool

Economic sentiment increased over the past two weeks. The Penta-CivicScience Economic Sentiment Index (ESI) rose 0.7 points to 35.5, the fifth consecutive rise since October 2022.

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Three of the ESI’s five indicators increased over the past two weeks. Confidence in personal finances improved the most, increasing 3.4 points to 56.3, its largest increase since July.

—Confidence in making a major purchase rose 1.0 points to 21.4.

—Confidence in finding a new job rose 0.1 points to 41.6.

—Confidence in buying a new home fell 0.9 points to 21.2.

—Confidence in the overall U.S. economy fell 0.3 points to 36.9.

Confidence in the overall U.S. economy fell as interest rates reached a fifteen-year high following the Fed’s decision to raise rates by another half a percentage point. This increase created market turmoil, with the Dow falling more than 700 points, and marked a shift from the previous consecutive rate hikes of .75%, largely due to cooling inflation. 

November’s Consumer Price Index (CPI) data left consumers feeling positive ahead of the holiday season, as prices saw their lowest increase since December 2021. While inflation remained high with a 7.1% CPI increase in November from a year ago, it was only a 0.1% increase from October, beating some economists’ estimate of 0.3% and continuing a trend of falling prices that began after June’s peak of 9.1%. 

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The ESI’s three-day moving average began this two-week stretch at a peak of 36.8 on December 7. It fell to a low of 33.2 on December 10 before rising to 36.0 on December 18. The three-day average then trended downward to 35.2 on December 19, before rising to 35.5 on December 20 to close out the session.

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The next release of the ESI will be Wednesday, January 4, 2023.

Economic sentiment jumps at fastest pace since July 2022

Economic sentiment increased over the past two weeks. The Penta-CivicScience Economic Sentiment Index (ESI) rose 1.4 points to 34.8, the largest increase since July and the fourth consecutive rise.

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Four of the ESI’s five indicators increased over the past two weeks. Confidence in buying a new home improved the most, increasing 3.6 points to 22.1, its largest increase in more than a year.

—Confidence in making a major purchase rose 3.0 points to 20.4.

—Confidence in finding a new job rose 1.5 points to 41.5.

—Confidence in personal finances rose 1.3 points to 52.9.

—Confidence in the overall U.S. economy fell 2.3 points to 37.2.

Meanwhile, both personal and disposable income rose 0.7% in October according to the Bureau of Economic Analysis. The rise in income has not translated into savings, with the personal savings rate at 2.3%, the lowest point since 2005. This represents a significant decrease from peak pandemic levels when the personal after-tax savings rate was greater than 30%. Some experts predict the heightened spending to continue happening in the short term due to the cushion some Americans built during the pandemic. 

The job market continued to be a bright spot for the economy, with the U.S. adding 263,000 jobs according to the Bureau of Labor Statistics—beating the 200,000 that Bloomberg had predicted. The growth in jobs was strong across the economy as gains were spread across industries, including 88,000 in leisure and hospitality, 55,000 in health care, 42,000 in government, 24,000 in other services, 23,000 in social assistance, 20,000 in construction, 18,000 in information, 14,000 in manufacturing, 14,000 in financial services, and 6,000 in professional and business services. 

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The ESI’s three-day moving average began this two-week stretch at 34.8 on November 23. It fell to 34.1 on November 28 before rising to a peak of 36.0 on November 29. The three-day average then trended downward to a low of 33.7 on December 2, rose to 35.8 on December 5, then fell to 35.1 on December 6 to close out the session. 

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The next release of the ESI will be Wednesday, December 21, 2022.

Economic sentiment rises as confidence in the overall U.S. economy jumps

Economic sentiment increased over the past two weeks, the third-straight rise. The Penta-CivicScience Economic Sentiment Index (ESI) rose 0.4 points to 33.4, driven by the largest increase in confidence in the U.S. economy in over a year. 

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Two of the ESI’s five indicators increased over the past two weeks. Confidence in the overall U.S. economy improved the most, increasing 5.5 points to 39.5, its highest level since the first week of January. 

—Confidence in personal finances rose 0.5 points to 51.6.

—Confidence in finding a new job fell 1.7 points to 40.0.

—Confidence in buying a new home fell 1.5 points to 18.5

—Confidence in making a major purchase fell 0.8 points to 17.4.

The U.S. economy is showing some positive signs, including the Federal Reserve Bank of Atlanta’s prediction of a 4.2% growth for real GDP in the fourth quarter of 2022, leading some to believe the economy may indeed achieve the “soft landing” the Fed has been hoping for. The strong prediction has been accompanied by signs of slowing inflation, such as wholesale prices—which rose by 8% in October from a year before, the smallest increase since July of last year. 

U.S. retail sales rose sharply in October, increasing 1.3% compared with September, while retailers themselves are experiencing a decline in revenue ahead of the holiday season. Strong consumer spending persists amid high inflation, climbing interest rates, and an overall challenging economic climate.

Meanwhile, major companies, primarily tech companies, including Amazon, Twitter, Carvana, Robinhood, and others reduced their workforce by hundreds or thousands in November. These sweeping layoffs have helped fuel concerns about the labor market.

The housing market also saw signs of trouble, with home sales in the U.S. declining for the ninth month in a row in October. Along with the falling home sales has been a decline in housing starts, a measure of new construction, and a rise in prices.  

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The ESI’s three-day moving average began this two-week stretch at 32.6 on November 9. It fell to a low of 30.8 on November 12 before rising to 34.6 on November 15. The three-day average then trended downward to 32.7 on November 18, rose to a peak of 36.0 on November 21, before falling to 34.8 on November 22 to close out the session. 

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The next release of the ESI will be Wednesday, December 7, 2022.