Economic Sentiment Falters Following Months-Long Rebound
Following the largest ever reading-to-reading increase in its seven-year history, the HPS-CivicScience Economic Sentiment Index (ESI) lost momentum, dropping 1.3 points to 47.8. While the last reading was driven by record-setting surges in confidence toward the job market and the economy, this reading’s drop was driven by significant losses from those very same indicators.
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Three of the ESI indicators declined over the past two weeks. Confidence in the broader U.S. economy plummeted by 2.5 points down to 53.7, while confidence in the job market decreased by 2.4 points to 33.6. Confidence toward making a major purchase also experienced losses, declining by 1.5 points to 44.7. Consumers’ confidence in the housing market experienced no change, remaining at 53.1, its highest level since March. The only indicator to improve was confidence in personal finances, which rose 0.2 points to 54.1.
The decline in consumer confidence occurs as many states begin to reopen and the economy shows mixed signs of recovery. Among the states that have reopened and hoped to improve economic activity, some have seen COVID-19 cases begin to increase once more. Though unemployment has declined and layoffs have slowed, concerns about the resurgence of coronavirus have left many unsure about how well the job market can sustain its gains. While consumer spending is slowly recovering, new data shows that the largest cutback in spending came from the highest-earning quarter of Americans, whose spending accounts for about half of the decline in consumption during this recession and continues to recover at the slowest rate as compared to other quartiles. Between stimulus benefits and lowered consumption, the U.S. savings rate has skyrocketed, but tens of millions of unemployed workers face a fast-approaching “income cliff” as additional federal unemployment benefits disappear at the end of July.
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The ESI’s three-day moving average began the two-week stretch at its peak of 51.6 on June 10 before dropping to its low of 43.2 on June 16. The moving average then slowly bounced back, closing out the reading on June 23 at 49.0.
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The next release of the ESI will be on Wednesday, July 8, 2020.
About the Index
The HPS-CivicScience Economic Sentiment Index (“ESI”) is a “living” index that measures U.S. adults’ expectations for the economy going forward, as well as their feelings about current conditions for major purchases. The primary goal of the Index is to accurately measure movements in overall national economic sentiment, and to provide a more sophisticated alternative to existing economic sentiment indices. Unlike other prominent indices that release consumer sentiment estimates infrequently, the HPS-CivicScience Index is updated in real time as responses are collected continuously every hour, every day. Large-scale cross-tabulation of survey responses and consumer attributes enable more granular analyses than are currently possible through prevailing measures.
For a more detailed overview of the Index and the underlying methodology, please request a white paper, and follow us on Twitter – @HPS_CS.
About Hamilton Place Strategies (HPS)
Hamilton Place Strategies (HPS) is an analytical public affairs consulting firm with offices in Washington, D.C. New York, and California. We integrate substantive analysis with communications and believe a deep understanding of business and economics leads to more effective public engagement and better outcomes for our clients.
For more information, visit Hamilton Place Strategies by clicking here and follow them on Twitter – @HPSInsight.
About CivicScience
CivicScience, Inc. provides the leading intelligent polling and real-time consumer insights platform, the InsightStore™. Its proprietary platform powers the world’s opinions and quickly gets that data to the decision makers who care. Every day, CivicScience polls ask millions of people questions related to thousands of topics, while its powerful data science and big data technology analyzes current consumer opinions, discovers trends as they start, and accurately predicts future behaviors and market outcomes. CivicScience polls run on hundreds of premier websites, in addition to its own public polling site at www.civicscience.com. CivicScience’s InsightStore™ is used by leading enterprises in marketing research, advertising, media, financial services, and political polling. For more information, visit CivicScience by clicking here and follow them on Twitter – @CivicScience.