Confidence Drops in Finding Jobs and Buying Homes as Economic Uncertainty Rises

Economic sentiment dropped over the past two weeks, matching one of the lowest readings in the past 12 months, with the greatest decreases being in confidence in making a major purchase, and confidence in both finding a new job and buying a home.

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The report comes from the HPS-CivicScience Economic Sentiment Index (ESI). The ESI decreased 0.8 points to 40.5 to mark the first half of February, according to a press release.

Confidence in making a major purchase fell 0.9 points to 26.4. This was accompanied by drops in confidence in both finding a new job and buying a new home, which fell 1.4 points to 54.1 and 1.1 points to 27.1, respectively.

Confidence in personal finances and the overall U.S. economy remained largely stable, however, with the former going up 0.1 points to 55.8 and the latter falling 0.1 points to 39, according to the ESI.

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Drivers of the decrease in confidence include the Consumer Price Index (CPI) inflation metric increasing 7.5% year-over-year, a 40-year high, according to  the Bureau of Labor Statistics’ announcement on Feb. 10.

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Additional drivers for the decrease in confidence include geopolitical concerns over the rising tensions between Ukraine and Russia, and the Federal Reserve officials signaling they may consider interest rate hikes in March, the ESI said.

The ESI findings are in line with those of Fannie Mae. In January, a survey record-low 25% of respondents reported that it’s a good time to buy a home, compared to the 69% of consumers who reported that it’s a good time to sell.

Consumers also reported greater concerns about job stability and the future path of mortgage rates. Year over year, the full index is down 5.9 points, according to Fannie Mae, as GOBankingRates previously reported.

“Younger consumers — more so than other groups — expect home prices to rise even further, and they also reported a greater sense of macroeconomic pessimism,” Doug Duncan, Fannie Mae Senior Vice President and Chief Economist, said in a press release on Feb. 7. ” Additionally, while the younger respondents are typically the most optimistic about their future finances, this month their sense of optimism around their personal financial situation declined. All of this points back to the current lack of affordable housing stock, as younger generations appear to be feeling it particularly acutely and, absent an uptick in supply, may have their homeownership aspirations delayed.

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The ESI measures U.S. adults’ expectations for the economy going forward, as well as their feelings about current conditions for major purchases. Unlike other prominent indices that release consumer sentiment estimates infrequently, it is updated in real-time as responses are collected continuously every hour of every day, according to the index’s site.

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About the Author

Yaël Bizouati-Kennedy is a full-time financial journalist and has written for several publications, including Dow Jones, The Financial Times Group, Bloomberg and Business Insider. She also worked as a vice president/senior content writer for major NYC-based financial companies, including New York Life and MSCI. Yaël is now freelancing and most recently, she co-authored  the book “Blockchain for Medical Research: Accelerating Trust in Healthcare,” with Dr. Sean Manion. (CRC Press, April 2020) She holds two master’s degrees, including one in Journalism from New York University and one in Russian Studies from Université Toulouse-Jean Jaurès, France.

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