Economic Sentiment Increases After A Month Of Declines
Economic sentiment increased over the past two weeks. The Penta-CivicScience Economic Sentiment Index (ESI) rose 0.9 points to 33.9, largely driven by an increase in confidence in finding a new job.
All five of the ESI’s indicators rose over the past two weeks. Confidence in finding a new job rose the most—increasing 2.3 points to 45.3.
—Confidence in making a major purchase rose 0.8 points to 19.8.
—Confidence in buying a new home rose 0.4 points to 21.0.
—Confidence in personal finances rose 0.3 points to 48.9.
—Confidence in the overall U.S. economy rose 0.2 points to 34.2.
The U.S. economy shrank less than initially estimated during the second quarter according to updated data released by the U.S. Bureau of Economic Analysis. U.S. GDP shrank at an annualized rate of 0.6%, bolstered by upward revisions to consumer spending and private inventory investments. Despite this marking the second consecutive quarter of contraction, many economists do not believe the U.S. is in a recession, pointing to the strong labor market and increased consumer spending.
While the Federal Reserve has continued to raise interest rates, inflation has slowed, with consumer prices rising 6.3% in July from a year earlier, down half a percentage point from June. The slowdown appears to have continued into August—suggesting that June may have been the peak of inflation. Additionally, the producer-price index, which generally reflects supply conditions in the economy, had its smallest annual increase since October 2021, rising only 9.8%.
Falling inflation was joined by the continued strength of the job market, with nearly 1 million more job openings than expected in July and openings outnumbering available workers by an almost 2-to-1 margin.
The ESI’s three-day moving average began this two-week stretch at 33.5 on Wednesday, August 17. It hit its two-week high of 36.2 on Sunday, August 21 then trended downward to 33.0 on Wednesday, August 24. The three-day moving average then oscillated between increasing and decreasing before closing out the session at a low of 32.0.
The next release of the ESI will be Wednesday, September 14th, 2022.