Economic sentiment continues its decline ahead of the September FOMC meeting

The latest biweekly reading of the Penta-CivicScience Economic Sentiment Index (ESI) decreased 0.9 points to 30.1, as consumers faced persistent inflation, rising borrowing costs, and continued uncertainty in energy markets.

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All of the ESI’s five indicators decreased during this period. Confidence in making a major purchase decreased the most, falling 1.7 points to 22.5.

—Confidence in the overall U.S. economy decreased 1.5 points to 26.9.
—Confidence in finding a new job decreased 1.1 points to 26.7.
—Confidence in buying a new home decreased 0.1 points to 24.3.
—Confidence in personal finances decreased 0.1 points to 50.1.

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The Bureau of Economic Analysis (BEA) reported that the July Personal Consumption Expenditures (PCE) price index increased 0.2 percent during the month and 3.7 percent year-over-year, remaining above the Federal Reserve’s 2 percent target. Core PCE, which excludes volatile food and energy prices, increased 3.3 percent annually. Meanwhile, consumer spending rose just 0.2 percent and was essentially flat after adjusting for inflation, as elevated prices continued to weigh on consumers.

At the Fed’s annual Jackson Hole symposium, Fed Chair Kevin Warsh reiterated the central bank’s focus on controlling inflation, stating that the Fed’s “predominant focus right now should be on prices.” Subsequent developments in energy markets underscored the challenge facing the Fed. Oil prices rose sharply as continued conflict between the United States and Iran raised concerns about global energy supplies. On September 8, Brent crude approached $100 for the first time since July. A sustained increase in energy prices could place additional pressure on gasoline prices and broader inflation, further complicating the Fed’s interest rate decisions.

The August Jobs Report showed that employers added 162,000 jobs while the unemployment rate remained unchanged at 4.1 percent. The increase significantly exceeded economists’ expectations, while June and July payroll gains were revised upward by a combined 55,000 jobs. Financial markets fell following the report as the stronger-than-expected results increased expectations for a rate hike at the Fed’s September meeting.

Mortgage rates also increased during the period, adding to affordability challenges for prospective homebuyers. Freddie Mac reported that the average 30-year fixed mortgage rate rose to 6.71 percent during the week ending September 3, its highest level of 2026 and up from 6.66 percent the previous week. The increase comes as rising Treasury yields continue to push borrowing costs higher.

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The ESI’s three-day moving average followed a volatile path over the two-week period. It began at 30.4 on August 26 before falling sharply the next day to 28.6. It then rose up, reaching a high of 32.1 on September 1 before plummeting to a low of 27.5 on September 4. The three-day moving average then rose back up, reaching 31.9 on September 8 to close out the session.

The next release of the ESI will be on Wednesday, September 23, 2026.

Note: This article was updated on September 15, 2026. A system reporting error affected the underlying data, requiring an update to the headline, selected body text, and charts. The current version reflects the finalized, audited data for August 26–September 8, 2026.

Economic sentiment declines amid rising bond yields and new tariffs

The latest biweekly reading of the Penta-CivicScience Economic Sentiment Index (ESI) decreased 1.3 points to 31.0, reversing some of the gains from the previous period after the U.S. national debt was announced to have exceeded $40 trillion.

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Four of the ESI’s five indicators decreased during this period. Confidence in the overall U.S. economy decreased the most, falling 3.0 points to 28.4.

—Confidence in buying a new home decreased 1.9 points to 24.4.

—Confidence in finding a new job decreased 1.2 points to 27.8.

—Confidence in personal finances decreased 0.8 points to 50.2.

—Confidence in making a major purchase increased 0.4 points to 24.2.

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Following news that the U.S. national debt exceeded $40 trillion, the yield on 30-year U.S. Treasury bonds reached 5.34 percent on August 18, its highest level since 2007, amid concerns about persistent inflation, growing federal debt, and the economic effects of the conflict in the Middle East. The selloff pushed borrowing costs higher across the economy and weighed on stocks, particularly technology shares. The Treasury Department responded by doubling the size of planned liquidity-support buybacks for longer-term debt, sending the 30-year yield sharply lower the following day.

Trade uncertainty also increased during the period. The White House implemented 50 percent tariffs on roughly $20 billion of Canadian goods following stalled trade negotiations, including certain alcohol, dairy, and motor vehicle imports. After briefly delaying implementation, the tariffs took effect on August 22, while Canada announced plans for retaliatory measures. Separately, the administration intensified economic pressure on Iran and countries that continue doing business with it. The move, dubbed “Operation Economic Outcast” by Treasury Secretary Scott Bessent, imposes new sanctions that target additional Iran-linked entities and threatens secondary sanctions against countries maintaining financial ties with Tehran.

Earlier in the period, the Bureau of Labor Statistics reported that the July Consumer Price Index (CPI) rose 0.1 percent from the previous month and 3.4 percent from a year earlier, down from a 3.5 percent annual increase in June. Core inflation, which excludes volatile food and energy prices, rose 0.2 percent for the month and 2.5 percent year over year. Energy prices fell 1.5 percent, helping offset increases in shelter and food costs, although they remain nearly 15 percent higher than this time last year. Furthermore, inflation outpaced wage growth for the fourth consecutive month as wages grew 3.2 percent in July. 

Consumer spending also weakened in July. The Census Bureau showed that U.S. retail sales fell 0.6 percent, the largest drop in over a year, following a 0.2 percent increase in June. Nevertheless, sales remained 5.0 percent higher than a year earlier. The decline added to signs that elevated prices and borrowing costs may be weighing on consumers even as spending remains above last year’s levels.

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The ESI’s three-day moving average trended downward over the two-week period. It began at a high of 34.5 on August 12 and then fell to 30.8 on August 15 before slightly rebounding to 32.4 on August 16. It remained relatively steady until another decline that began August 19 that reached a period low of 28.1 on August 21. It then climbed to 32.8 on August 24 before falling back down to 30.6 on August 25 to close out the session.

The next release of the ESI will be on Wednesday, September 9, 2026.

Economic sentiment rebounds amid persistent inflation and a softening labor market

The latest biweekly reading of the Penta-CivicScience Economic Sentiment Index (ESI) increased 1.5 points to 32.3—partially reversing the decline in the previous period—despite persistent inflation and signs of a weakening labor market.

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Four of the ESI’s five indicators increased during this period. Confidence in the overall U.S. economy increased the most, rising 3.4 points to 31.4.

—Confidence in finding a new job increased 3.1 points to 29.0.

—Confidence in buying a new home increased 1.7 points to 26.3.

—Confidence in making a major purchase increased 0.6 points to 23.8.

—Confidence in personal finances decreased 1.2 points to 51.0.

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The Bureau of Economic Analysis’ (BEA) June Personal Consumption Expenditures (PCE) price index showed that the U.S. inflation rate increased 3.7 percent year-over-year, down from a 4.1 percent annual increase in May. Core PCE, which excludes volatile food and energy prices, increased 3.3 percent year-over-year. While the annual rate of inflation has slowed since May, inflation continues to run above the Fed’s 2 percent target, and this decline could prove temporary if renewed conflict in the Middle East continues to place upward pressure on energy prices.

The Bureau of Labor Statistics reported that the economy shed 23,000 jobs in July, while the unemployment rate declined slightly to 4.1 percent. May and June payroll gains were also revised downward by a combined 103,000 jobs, adding to evidence of a slowdown in hiring even as job growth remained positive for both months after revision. Financial markets surged following the report’s release, as the weaker-than-expected results decreased the likelihood of a rate increase at the Fed’s September meeting.

The Federal Reserve held the federal funds rate steady at 3.5 to 3.75 percent at its July meeting. The decision passed by a 9–3 vote, with Federal Open Markets Committee (FOMC) participants Beth Hammack, Neel Kashkari, and Lorie Logan favoring a 0.25-percentage-point rate increase. The unusually divided vote underscored growing disagreement within the FOMC over whether elevated inflation warrants additional monetary tightening, particularly as energy-related price pressures continue to be a concern. 

BEA released its initial estimate for gross domestic product (GDP) for the second quarter of 2026 which indicated slowing U.S. economic growth, with GDP increasing at an annual rate of 1.5 percent, down from 2.1 percent in the first quarter. This came in slightly-below economists’ predictions of a 1.8 percent gain. The slower pace of growth reflects the economic strain imposed by the conflict in the Middle East, even as core GDP, which includes only consumer spending and gross private investment, surged 3.9 percent, fueled by the artificial intelligence boom.

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The ESI’s three-day moving average followed a volatile but ultimately upward path over the two-week period. It began at 31.8 on July 29 and then fell to a low of 29.5 on August 1 before rebounding to 32.4 on August 3. It then fluctuated over the following days but maintained an upward trend, climbing to a peak of 33.5 on August 10 before edging down to 33.2 on August 11 to close out the session.

The next release of the ESI will be on Wednesday, August 26, 2026.

Economic sentiment declines ahead of the July FOMC meeting

The latest biweekly reading of the Penta-CivicScience Economic Sentiment Index (ESI) decreased 2.6 points to 30.8 ahead of the July FOMC meeting, driven by renewed volatility as geopolitical conflict increased energy prices and the White House announced new tariffs.

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All five of the ESI’s indicators decreased during this period. Confidence in the overall U.S. economy decreased the most, falling 8.2 points to 28.0.

—Confidence in buying a new home decreased 2.2 points to 24.6.
—Confidence in personal finances decreased 1.5 points to 52.2.
—Confidence in finding a new job decreased 0.6 points to 25.9.
—Confidence in making a major purchase decreased 0.5 points to 23.2.

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Renewed tensions between the United States and Iran pushed oil prices sharply higher as attacks on commercial vessels and military sites raised concerns about shipping through the Strait of Hormuz. Brent crude briefly rose above $100 per barrel before falling after the two countries paused attacks and diplomatic negotiations resumed. The renewed volatility in energy markets threatens to place additional pressure on gasoline prices and broader inflation, complicating the Federal Reserve’s interest rate decisions and adding another source of strain for consumers.

The Census Bureau reported that U.S. retail and food services sales increased 0.2 percent in June, following an upwardly revised 1.0 percent increase in May. Sales were 6.7 percent higher than a year earlier, signaling that consumer spending remained resilient despite elevated prices and borrowing costs. However, because the estimates are not adjusted for inflation and the monthly increase was modest, the report suggests that spending continued to grow without a significant acceleration in underlying consumer demand.

Housing starts increased 19.0 percent in June, driven primarily by multifamily construction, while single-family starts were largely unchanged and building permits fell 3.0 percent. New-home sales increased 1.6 percent but remained 5.6 percent below their level a year earlier, while the average 30-year fixed mortgage rate rose to 6.58 percent, the highest level in nearly a year. Together, the data suggest that high borrowing costs continue to weigh on prospective homebuyers despite some improvement in construction and sales activity.

On July 23, the White House announced new tariffs of 10 or 12.5 percent on imports from 60 trading partners that it determined had failed to impose or effectively enforce bans on goods produced with forced labor. The action applies to trading partners accounting for 99.4 percent of U.S. imports, although certain products and materials are exempted. These tariffs are effectively replacing a temporary 10 percent global tariff that was imposed following the Supreme Court’s decision to strike down the president’s “Liberation Day” emergency tariffs imposed under the International Emergency Economic Powers Act. The new duties could raise costs for businesses that depend on imported goods and add to inflationary pressure if companies pass those costs on to consumers.

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The ESI’s three-day moving average remained relatively stable over the two-week period, falling to a low of 28.6 on July 18 before climbing to a period high of 32.6 on July 21. The three-day moving average then oscillated before falling to 29.6 on July 27 and bouncing back to 31.0 to close out the session.

The next release of the ESI will be on Wednesday, August 12, 2026.

Economic sentiment improves as inflation eases and hiring slows

The latest biweekly reading of the Penta-CivicScience Economic Sentiment Index (ESI) rose 1.5 points to 33.4 as inflation eased but slower job growth and renewed geopolitical tensions complicated the economic outlook.

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Four of the ESI’s five indicators increased during this period. Confidence in the overall U.S. economy increased the most, rising 2.2 points to 36.2.

—Confidence in personal finances increased 2.1 points to 53.7.
—Confidence in buying a new home increased 2.1 points to 26.8.
—Confidence in making a major purchase increased 1.5 points to 23.7.
—Confidence in finding a new job decreased 0.7 points to 26.5.

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The Bureau of Labor Statistics (BLS) reported that the June Consumer Price Index (CPI) fell 0.4 percent from May, driven largely by lower gasoline prices, while core prices excluding food and energy were unchanged. Compared with a year earlier, overall prices were up 3.5 percent, down from 4.2 percent in May, and core inflation slowed to 2.6 percent. The report marked an encouraging step toward lower inflation, though overall prices remain well above their pre-pandemic levels.

Renewed uncertainty between the United States and Iran has again placed upward pressure on oil prices. Crude oil prices rose as attacks on commercial vessels and military sites raised questions about whether the fragile truce would hold and whether tanker traffic through the Strait of Hormuz could be safely maintained. Brent crude exceeded $83 per barrel as the conflict intensified, while the national average gasoline price began to edge higher. A sustained increase in energy costs would place additional pressure on household budgets and could reverse some of the improvement reflected in June’s inflation report.

Meanwhile, the labor market lost momentum in June. According to BLS’s June Jobs Report, employers added 57,000 jobs, while the unemployment rate remained unchanged at 4.2 percent. Hiring was concentrated in professional and business services, social assistance, and health care, while leisure and hospitality employment declined by 61,000. Job growth in April and May was also revised downward by a combined 74,000 positions. Although layoffs remain limited and wage growth continues to outpace inflation, the weaker pace of hiring could weigh on consumers’ confidence in the labor market and their own financial prospects.

Against this backdrop, Federal Reserve Chair Kevin Warsh offered few indications about whether policymakers would raise interest rates at their July meeting during his first semiannual testimony before Congress on July 14. Warsh reiterated the central bank’s commitment to controlling inflation, saying the Fed had “no tolerance” for persistently high inflation. Meanwhile, he characterized the labor market as broadly stable and cautioned against drawing firm conclusions from a single favorable inflation report, particularly as renewed conflict with Iran threatens to push energy prices higher. His comments suggest the Fed is likely to remain cautious as it weighs improving inflation data against continued geopolitical and price uncertainty.

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The ESI’s three-day moving average followed a volatile path over the two-week period, climbing to a mid-period high before plunging and recovering most of its losses by the close. It began the two-week stretch at 35.0 on July 1 and decreased the next day before rising to a high of 35.9 on July 6. It then decreased to a low of 30.4 on July 11 before rising back up to 35.2 on July 13. The three-day moving average then fell to 34.6 on July 14 to close out the session.

The next release of the ESI will be on Wednesday, July 29, 2026.