Post-Election Economic Sentiment Plunges Amid Worsening Pandemic

Consumer economic sentiment saw its second consecutive decline in the wake of a drawn-out election and rapidly climbing COVID-19 cases. The latest reading of the HPS-CivicScience Economic Sentiment Index (ESI) showed a drop of 2.2 points to 47.8, most of which occurred after election day according to the three-day moving average. This ties with a drop in July as the ESI’s most significant single-reading drop since March’s 9.3-point plunge at the outset of the pandemic.

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In the first reading following the win of President-elect Joe Biden, all five the ESI’s individual indicators fell during the two-week reading period. The largest decline was a 3.6-point drop in confidence in personal finances, followed closely by a 3.5-point drop in confidence in making a major purchase. Consumer sentiment toward the housing market and broader U.S. economy also fell by 1.8 and 1.2 points, respectively. The indicator that showed the smallest loss was confidence in the job market, which dropped by 0.8 points down to 39.2.

The decline in confidence over the past two weeks comes as the public turns away from election news coverage and grapples with the rise in new virus cases. Just yesterday, the U.S. saw 135,000 new coronavirus cases and 1,403 additional deaths, sparking concerns over hospital capacity and renewed efforts to slow the spread. While the latest jobs report showed signs of a continued rebound, experts remain concerned about long-lasting effects. The sizeable drop in how people are feeling about their wallets ahead of the holiday season—particularly the loss in the personal finance and major purchase indicators— lines up with the Bureau of Economic Analysis’s recent finding that personal income fell significantly even as GDP grew, adding to the sense of urgency for Congress to pass another stimulus package.

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The ESI’s three-day moving average began the two-week stretch at 48.8, rising to its two-week high of 50.2 on November 2. The moving average fell to its low of 44.8 on November 8 before bouncing back to close out the reading at 47.0 points.

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The next release of the ESI will be on Tuesday, November 24, 2020.