Consumer Confidence in the Economy Hits Near-Historic Low
A new report from Civic Science showed that economic sentiment continued to decline over the past two weeks, with consumers expressing particular concern and lack of confidence in the U.S. economy overall.
The HPS-CivicScience Economic Sentiment Index (ESI) dropped 0.4 points to 42.5, ever closer to the all-time low of 40.1, which was reached in March 2020 at the beginning of the COVID-19 pandemic in the United States.
There are five different indicators in the ESI. Confidence in the economy fell the most overall in the past two weeks, dropping 2.5 points, which represents an overall decrease of 18.6 points from the previous high reached back in March of this year. The drop comes as the Delta variant continues to run rampant through parts of the United States and affect businesses and school closures. Restaurant dining, office occupancy and airline travel all declined in recent weeks, as well.
These sentiments are coupled with runaway inflation that is currently at 30-year highs. The Fed has maintained its opinion that current inflation is transitory and simply an effect of the ongoing pandemic that will ease once coronavirus conditions improve. However, according to the Bureau of Labor Statistics (BLS), the Personal Consumption Index was up 4.2% in the 12 months ended July 2021 — the highest rate since 1991.
Another notable ESI indicator — personal finance confidence — dropped 1.7 points. Additionally, confidence in making a major purchase of any kind decreased as well, dropping 0.8 points to 3.7.
Interestingly, confidence in the housing market rose 2.1 points to 30.4, but Civic Science points out that this figure still represents near all-time lows. Also of note, confidence in finding a new job rose slightly by 0.5 points to 57.0.
The decline in overall consumer confidence is conflated by inflationary pressures and Delta variant concerns. The economic situation is already constricted by the ongoing pandemic, but the combination of unrelenting upward price trends and the uncertainty surrounding a full return to the office has kept consumers weary.
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Last updated: September 2, 2021