ESI: Rebound In Consumer Confidence Short-Lived As Economic Sentiment Drops Sharply Over Fears About The U.S. Economy

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.

Excerpt From the Latest Reading: 

Consumer confidence fell considerably over the past two weeks, according to the HPS-CivicScience Economic Sentiment Index (ESI), following a slight uptick in confidence in the last reading. The ESI fell 1.9 points over the past two weeks. Fueling the drop was a drastic decrease of 5.0 points in confidence in the overall U.S. economy. Counterintuitively, confidence in the housing market rose to a 12-month high.

Four of the ESI’s five indicators fell over the past two weeks. Confidence in the broader U.S. economy dropped the most drastically, falling 5.0 points to 44.7, its largest drop since August 2019. Confidence in labor markets fell by 2.6 points and confidence in making a major purchase fell by 2.3 points, to 43.4 and 53.6, respectively. Confidence in personal finances posted a more modest decline, falling 1.2 points to 63.8. The only indicator to rise over the past two weeks was confidence in the housing market, which rose 1.4 points to 53.3.

The sharp decline in consumer confidence comes as uncertainty grows surrounding the economic impact of the global coronavirus epidemic. U.S. stocks last week suffered their worst weekly losses since the 2008 financial crisis. New home sales, however, jumped 7.9% in January — to the highest level since July 2007 — according to Commerce Department data released last week. Relatedly, 30-year mortgage rates reached their lowest rates in February since July 2016, according to Freddie Mac data.

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