Economic sentiment decreases following a worse-than-expected jobs report

The latest biweekly reading of the Penta-CivicScience Economic Sentiment Index (ESI) fell by 0.7 points to 30.9, erasing the prior period’s gains and hovering near its one-year low.

Four of the ESI’s five indicators decreased during this period. Confidence in personal finances decreased the most, falling 3.1 points to 49.9. This marks this indicator’s largest decline since April 2025.

—Confidence in finding a new job decreased 0.6 points to 24.4.
—Confidence in the overall U.S. economy decreased 0.5 points to 28.8.
—Confidence in buying a new home decreased 0.3 points to 27.5.
—Confidence in making a major purchase increased 0.9 points to 23.9.

The February Jobs Report showed that total nonfarm payroll employment fell by 92,000, largely driven by strike-related losses in the health care sector. The decline was worse than expected. Economists surveyed by The Wall Street Journal had projected a gain of 50,000 jobs. The unemployment rate also ticked up to 4.4 percent. Diane Swonk, chief economist at KPMG U.S., stated that this report “illustrates how fragile the economy is on the labor market side,” and that “the labor market weakness that we had seen emerge last year has not completely abated.” This report also raises fresh questions about whether the Federal Reserve will adjust interest rates in order to uphold its dual mandate to promote maximum employment and stable prices.

Similarly, the Fed published the latest edition of the Beige Book, a collection of anonymous anecdotes from businesses and economic experts across the country summarizing local economic conditions in each of the Fed’s 12 districts. In February, seven districts reported slight to moderate economic growth, while five saw flat or declining activity. Labor markets were generally stable across seven of the districts, while wages rose in most districts and prices increased across all 12.

Additionally, the Bureau of Labor Statistics (BLS) reported that the Producer Price Index (PPI), a measure of wholesale inflation, increased 0.5 percent in January and 2.9 percent year-over-year. Excluding food, energy, and trade services, the index rose 0.3 percent for the month. Evidence of sustained rise in input costs for materials, transport, and labor across production chains could reinforce a cautious approach from the Fed as it weighs its next interest rate decisions.

Finally, oil prices are rising after the U.S. and Israel launched airstrikes against Iran. The conflict has caused disruption to the global energy market, with oil prices surging past $100 per barrel and retail gasoline prices jumping to $3.45 per gallon on March 9. Depending on how this conflict progresses, persistent volatility could further raise oil and gas prices and overall inflation. Patrick De Haan, head of petroleum analysis at GasBuddy, estimates that “the chance of the national average reaching $4 per gallon in the next month is now 80 percent.”

The ESI’s three-day moving average began this two-week stretch at 29.8 on February 25. It then oscillated between increasing and decreasing, rising to a high of 32.5 on March 3 before falling to a low of 28.2 on March 8. The three-day moving average stayed at 28.2 on March 9 before rising to 30.6 on March 10 to close out the session.

The next release of the ESI will be on Wednesday, March 25, 2026.

Economic sentiment picks back up after two consecutive drops

The latest biweekly reading of the Penta-CivicScience Economic Sentiment Index (ESI) rose by 0.6 points to 31.6, reversing the downward trend of the previous two periods and bolstered by a one-year high in confidence in buying a new home.

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Three of the ESI’s five indicators increased during this period. Confidence in buying a new home increased the most, rising 2.8 points to 27.8.

—Confidence in finding a new job increased 0.8 points to 25.0.

—Confidence in personal finances increased 0.2 points to 53.0.

—Confidence in making a major purchase decreased 0.2 points to 23.0.

—Confidence in the overall U.S. economy decreased 0.5 points to 29.3.

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Late last week, the Supreme Court ruled that President Donald Trump cannot rely on the 1977 International Emergency Economic Powers Act to impose sweeping global tariffs. Despite this, trade uncertainty remains high, as the administration has moved to impose tariffs under other legal authorities—actions that could face further legal scrutiny. Questions also remain about the status of trade agreements negotiated under the previous tariff framework and the process for refunding an estimated $133 billion in collected duties. 

Mortgage rates continued to decline in February, with Freddie Mac reporting that the average 30-year fixed mortgage rate fell below 6 percent to approximately 5.99 percent, its lowest level since 2022. The decline has reduced borrowing costs for prospective homebuyers and contributed to a surge in refinancing activity. Data from the Mortgage Bankers Association’s survey for the week ending February 13 revealed that home loan refinancing applications are up over 130 percent higher from one year ago, even as pending home sales remained subdued.

The Bureau of Economic Analysis released its initial estimate for gross domestic product (GDP) for the fourth quarter of 2025 which indicated slowing U.S. economic growth in the final months of last year, with GDP increasing at an annual rate of 1.4 percent. This came in well-below economists’ predictions of a 2.5 percent gain. The slower pace of growth reflected a pullback in federal spending during the 2025 government shutdown and slower overall economic momentum relative to earlier quarters, even as personal consumption and business investment continued to contribute positively to growth. 

The U.S. economy added 130,000 jobs in January and the unemployment rate edged down to 4.3 percent, according to the Labor Department, marking a rebound after several weak months. However, annual revisions showed that the U.S. had nearly no job growth in 2025, with total gains for the year reduced to 181,000 and average monthly growth revised down to 15,000. January’s hiring was concentrated in health care, social assistance, and construction, while federal and financial sector employment declined. 

The Labor Department also reported that inflation eased in January, with the Consumer Price Index (CPI) rising 2.4 percent year-over-year, down from 2.7 percent in December, while core inflation edged down to 2.5 percent. Monthly price growth was softer than expected at 0.2 percent, as falling energy costs and moderating housing prices offset gains in some services. The combination of stabilizing employment and softer inflation provides near-term relief for the Federal Reserve, though tariff uncertainty and lingering core price pressures are likely to keep policymakers cautious about resuming rate cuts.

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The ESI’s three-day moving average began this two-week stretch at 31.5 on February 11. It decreased slightly to 29.7 on February 14 before rapidly climbing to a high of 35.6 on February 16. Following a period of steady decline, the three-day moving average dropped to a session low of 29.0 on February 23 before closing out the past two weeks at 29.9 on February 24.

The next release of the ESI will be on Wednesday, March 11, 2026.

Economic sentiment falls as confidence in finding a new job hits an all-time low

The latest biweekly reading of the Penta-CivicScience Economic Sentiment Index (ESI) fell by 1.7 points to 31.0, continuing its sharp decline and hitting its lowest level since November 2025.

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Four of the ESI’s five indicators decreased during this period. Confidence in finding a new job decreased the most, falling 3.9 points to 24.2, its lowest level in the ESI’s 12-year history.

—Confidence in the overall U.S. economy decreased 2.2 points to 29.8.

—Confidence in buying a new home decreased 1.5 points to 25.0.

—Confidence in making a major purchase decreased 0.8 points to 23.2.

—Confidence in personal finances remained flat at 52.8.

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The Federal Reserve held the federal-funds rate steady at 3.5 to 3.75 percent at its January meeting, marking the first pause since July and signaling reduced urgency to continue rate cuts. The decision passed 10–2, with two FOMC participants dissenting in favor of a quarter-point cut, reflecting continued division within the FOMC around current economic conditions and the path forward for monetary policy. Fed Chair Jerome Powell pointed to stronger recent growth data and signs that the labor market has stopped deteriorating, while inflation remains above the 2 percent target but no longer worsening. Officials indicated they intend to keep rates unchanged for an extended period unless labor market conditions weaken or inflation shows clearer progress.

Mortgage rates held steady in early February, with Freddie Mac reporting that the 30-year fixed-rate mortgage averaged 6.1 percent as of February 5, 2026, virtually unchanged from the prior week and down from 6.89 percent a year earlier. Freddie Mac Chief Economist Sam Khater noted that, “for the last several weeks, the 30-year fixed-rate mortgage has remained at its lowest level in years,” pointing to improving affordability and rising housing availability ahead of the spring sales season. While rates remain high by historical standards, their recent stability may ease near-term financing uncertainty for buyers and sellers. 

Over the last two weeks, the Commerce Department and the Labor Department have released key economic data from December 2025. Commerce Department data showed that retail sales were largely flat in December compared to November, missing expectations for the traditionally busy holiday shopping season. Meanwhile, data from the Labor Department showed that the producer-price index (PPI) increased by 0.5 percent in December, the biggest increase in five months. Taken together, the acceleration in PPI alongside flat retail sales complicates the inflation outlook, signaling upstream price pressures as demand appears to be leveling off.

The Dow Jones Industrial Average surged Friday, February 6, rising 2.47 percent and closing above 50,000 for the first time in history. This rally represented the index’s largest increase since May 2025 and was led by rebounds predominantly in the technology sector, underscoring the tension between optimism and concern around AI-driven tech growth and valuations.

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The ESI’s three-day moving average began this two-week stretch at 31.8 on January 28 before falling to a low of 29.9 on January 30. It then oscillated between rising and falling, trending upwards to a high of 32.1 on February 9. The three-day moving average then decreased, falling to 31.0 on February 10 to close out the session.

The next release of the ESI will be on Wednesday, February 25, 2026.

Economic sentiment falls sharply amid U.S.-Europe trade tensions

Over the past two weeks, the Penta-CivicScience Economic Sentiment Index (ESI) fell by 2.1 points to 32.7, offsetting many of the gains recorded in the prior period as all five of its indicators declined.

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All five of the ESI’s indicators decreased during this period, reversing many of the gains from the prior period. Confidence in making a major purchase decreased the most, falling 2.8 points to 24.0.

—Confidence in the overall U.S. economy decreased 2.6 points to 32.0.

—Confidence in buying a new home decreased 1.9 points to 26.5.

—Confidence in personal finances decreased 1.9 points to 52.8.

—Confidence in finding a new job decreased 1.2 points to 28.1.

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Global investors sold off U.S. assets last week as escalating trade and geopolitical tensions triggered a renewed “sell America” trade. Following President Donald Trump’s threat to impose tariffs of up to 25 percent on several European countries over the U.S. bid to acquire Greenland, Treasury bond prices fell sharply and gold surged toward a record one-day gain, reflecting a broad flight to safe assets outside the U.S. American stocks also dropped more than 2 percent across major indexes, while volatility spiked to multi-month highs. 

U.S. assets rebounded, however, after President Trump said the U.S. had reached a framework for a future deal on Greenland and would not proceed with tariffs scheduled to take effect on February 1. U.S. equities posted their strongest gains in months, with the S&P 500 rising more than 1 percent, as investors interpreted the announcement as a reduction in near-term trade and geopolitical risk rather than a resolution of underlying issues. 

The Federal Reserve’s preferred inflation gauge, the core personal consumption expenditures (PCE) price index, showed that consumer prices continued to rise at a moderate but persistent pace in late 2025, reinforcing signs that inflation has plateaued above the Fed’s 2 percent long-run target. Prices rose 0.2 percent in both October and November, leaving inflation up 2.7 percent and 2.8 percent year-over-year, respectively. While inflation is well below post-pandemic highs, goods prices have begun to reaccelerate following the introduction of new tariffs last spring, complicating the disinflation trend. 

The U.S. economy expanded at an annualized rate of 4.4 percent in the third quarter of 2025, its fastest pace in two years, according to an updated estimate from the Bureau of Economic Analysis. The acceleration—driven by strong consumer spending, rising exports, increased government outlays, and robust private investment—exceeded expectations of 3.3 percent growth. 

U.S. retail sales rose 0.6 percent in November to $735.9 billion, according to the Commerce Department, marking a rebound from October’s decline and outperforming analysts’ expectations of 0.4 percent growth. This jump in consumer spending, despite mounting economic uncertainties and a more cautious labor market, underscores the resilience of personal consumption, which continues to drive over two-thirds of the economy. 

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The ESI’s three-day moving average began this two-week stretch at 32.4 on January 14. It then decreased to a low of 32 on January 17 before eventually reaching a high of 33.5 on January 24, and ultimately closing out the past two weeks at 32.8 on January 27.

The next release of the ESI will be on Wednesday, February 11, 2026.

Economic sentiment begins 2026 with its largest increase since July 2022

Over the past two weeks, the Penta-CivicScience Economic Sentiment Index (ESI) posted its largest increase since July 2022, rising by 2.9 points to 34.8. This comes after a modest rise during the previous reading, where economic sentiment increased 0.5 points during the two-week period ending on December 30, 2025.

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All five ESI indicators increased during this period, building on gains posted by four of the five indicators in the prior period. In this period, confidence in personal finances increased the most, rising 4.3 points to 54.7.

—Confidence in finding a new job increased 3.0 points to 29.3.
—Confidence in buying a new home increased 3.0 points to 28.4.
—Confidence in making a major purchase increased 1.9 points to 26.8.
—Confidence in the overall U.S. economy increased 1.9 points to 34.6.

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The Bureau of Labor Statistics (BLS) released the December Consumer Price Index (CPI), showing that inflation rose 0.3 percent during the month and 2.7 percent year-over-year. This increase was primarily driven by shelter costs, which rose 0.4 percent in December. These data were relatively in line with November’s CPI, which showed that inflation increased 0.2 percent during the month and 2.7 percent annually. However, economists warned that inflation may have been understated in the November report due to collection issues during the shutdown. 

The BLS’ December Jobs Report showed that total nonfarm payroll employment increased by only 50,000 during the month, driven by increases in food services and drinking places, health care, and social assistance. Meanwhile the unemployment rate fell to 4.4 percent. Over the course of 2025, the economy added 584,000 jobs, or around 49,000 per month. In contrast, the economy added around 168,000 monthly jobs in 2024. Outside of the two most recent recessions, 2025 has recorded the slowest average monthly job growth in more than two decades.

Data from Freddie Mac showed that the average 30-year mortgage rate fell to a one-year low of 6.15 percent in the week ending December 31, offering modest relief to homebuyers heading into the new year. Yet with 30 million households, or 54 percent of primary mortgage holders, locked into rates at or below 4 percent, homeowners remain disincentivized to sell, suppressing housing market activity.

The Bureau of Economic Analysis released its initial estimate for gross domestic product (GDP) for the third quarter of 2025 which showed that real GDP increased 4.3 percent from July to September, coming in well-above economists’ predictions of 3.2 percent, primarily boosted by strong consumer spending. The report, which was initially set to be released on October 30 but delayed due to the government shutdown, points to surprising resilience in the economy despite persistent inflation.

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The past four weeks have been marked by fluctuations in the ESI’s three-day moving average. The moving average began at 31.8 on December 17. It then decreased to a low of 28.0 on December 20 before trending upward to 35.4 on December 26. The three-day moving average then fell again, decreasing to 31.4 on December 29 before increasing to a high of 36.8 on January 3. Finally, the three-day moving oscillated between increasing and decreasing, ultimately closing out the past four weeks at 33.0 on January 13.

The next release of the ESI will be on Wednesday, January 28, 2026.