HPS Analysis

ESI: Economic Sentiment Remains Steady

Economic sentiment went almost unchanged over the past two weeks. The HPS-CivicScience Economic Sentiment Index (ESI) fell 0.1 points to 33.8, largely driven by a decrease in confidence in finding a new job.

The ESI’s indicators were split between increasing and decreasing, and for the second time this year, confidence in making a major purchase went unchanged. Confidence in finding a new job changed the most—decreasing 2.0 points to 43.3 over the past two weeks.

—Confidence in the overall U.S. economy fell 0.1 points to 34.1.

—Confidence in making a major purchase remained the same at 19.8.

—Confidence in buying a new home rose 1.7 points to 22.7.

—Confidence in personal finances rose 0.3 points to 49.2.

The U.S. job market began to show signs of cooling off, as employers created 315,000 jobs in August, a significant decrease from the revised 526,000 jobs created in July. The unemployment rate also ticked up 0.2 percentage points to 3.7%.  

Meanwhile, the dollar’s recent surge has provided a boon to American consumers, allowing them to get more for their money. 

Some experts are predicting home prices will decrease up to 5% without a recession, and between 5% and 10% if a recession occurs. In many regions, the price decreases are expected to be larger, with over half of the nation’s largest regional housing markets vulnerable to home price declines of 15% to 20%.  

The ESI’s three-day moving average began this two-week stretch at a low of 31.3 on Wednesday, August 31. It trended upward to 34.1 on Sunday, August 21 then switched between increasing and decreasing before reaching 33.0 on Monday, September 12. The three-day moving average then jumped 1.6 points to close out the session at a high of 34.6. 

The next release of the ESI will be Wednesday, September 28, 2022.

More Insights