HPS Analysis

ESI: Economic Sentiment Drops To Another Record Low

Economic sentiment fell over the last two weeks, dropping below the previous all-time low by a 1.3 point margin. From reading to reading, the HPS-CivicScience Economic Sentiment Index (ESI) decreased 1.5 points to 34.5.

For the second straight time, all but one of the five indicators decreased. Confidence in buying a new home fell 1.4 points to 19.3, a new record low, while confidence in the U.S. economy dropped 2.9 points to an all-time low of 31.6.

— Confidence in finding a new job fell 0.3 points to 49.8.

— Confidence in personal finances fell 2.9 points to 50.6.

The only indicator to improve was confidence in making a major purchase, which rose 0.4 points to 21.4.

Last week, Chairman Jerome Powell announced that the Federal Reserve would hike its benchmark interest rate by 50 basis points in response to inflation and the “hardship it is causing.” Chairman Powell indicated, however, that the Fed is not “actively considering” raising rates by 75 basis points.

This week, the S&P 500 fell below 4,000 for the first time since March of 2021, and the 10-year Treasury yield rose above 3% for the first time since 2018. The tech-heavy Nasdaq is also officially in bear market territory, as stocks like Meta, Alphabet, Amazon, Apple, and Netflix have seen their values fall. 

The Labor Department released its monthly jobs report for April last week, which indicated that while 428,000 net new jobs were added to the economy and unemployment remained at 3.8%, the labor participation rate fell by 0.2 percentage points to 62.2%. 

The ESI’s three-day moving average began this two-week stretch at 35.6 on April 27. It hit its two-week high of 36.0 the following day and its low of 33.1 on May 4. The three-day moving average closed the session at 35.7 on May 10

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.

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.

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