The latest biweekly reading of the Penta-CivicScience Economic Sentiment Index (ESI) rose 1.5 points to 33.4 as inflation eased but slower job growth and renewed geopolitical tensions complicated the economic outlook.
Four of the ESI's five indicators increased during this period. Confidence in the overall U.S. economy increased the most, rising 2.2 points to 36.2.
—Confidence in personal finances increased 2.1 points to 53.7.
—Confidence in buying a new home increased 2.1 points to 26.8.
—Confidence in making a major purchase increased 1.5 points to 23.7.
—Confidence in finding a new job decreased 0.7 points to 26.5.
The Bureau of Labor Statistics (BLS) reported that the June Consumer Price Index (CPI) fell 0.4 percent from May, driven largely by lower gasoline prices, while core prices excluding food and energy were unchanged. Compared with a year earlier, overall prices were up 3.5 percent, down from 4.2 percent in May, and core inflation slowed to 2.6 percent. The report marked an encouraging step toward lower inflation, though overall prices remain well above their pre-pandemic levels.
Renewed uncertainty between the United States and Iran has again placed upward pressure on oil prices. Crude oil prices rose as attacks on commercial vessels and military sites raised questions about whether the fragile truce would hold and whether tanker traffic through the Strait of Hormuz could be safely maintained. Brent crude exceeded $83 per barrel as the conflict intensified, while the national average gasoline price began to edge higher. A sustained increase in energy costs would place additional pressure on household budgets and could reverse some of the improvement reflected in June’s inflation report.
Meanwhile, the labor market lost momentum in June. According to BLS's June Jobs Report, employers added 57,000 jobs, while the unemployment rate remained unchanged at 4.2 percent. Hiring was concentrated in professional and business services, social assistance, and health care, while leisure and hospitality employment declined by 61,000. Job growth in April and May was also revised downward by a combined 74,000 positions. Although layoffs remain limited and wage growth continues to outpace inflation, the weaker pace of hiring could weigh on consumers’ confidence in the labor market and their own financial prospects.
Against this backdrop, Federal Reserve Chair Kevin Warsh offered few indications about whether policymakers would raise interest rates at their July meeting during his first semiannual testimony before Congress on July 14. Warsh reiterated the central bank’s commitment to controlling inflation, saying the Fed had "no tolerance" for persistently high inflation. Meanwhile, he characterized the labor market as broadly stable and cautioned against drawing firm conclusions from a single favorable inflation report, particularly as renewed conflict with Iran threatens to push energy prices higher. His comments suggest the Fed is likely to remain cautious as it weighs improving inflation data against continued geopolitical and price uncertainty.
The ESI’s three-day moving average followed a volatile path over the two-week period, climbing to a mid-period high before plunging and recovering most of its losses by the close. It began the two-week stretch at 35.0 on July 1 and decreased the next day before rising to a high of 35.9 on July 6. It then decreased to a low of 30.4 on July 11 before rising back up to 35.2 on July 13. The three-day moving average then fell to 34.6 on July 14 to close out the session.
The next release of the ESI will be on Wednesday, July 29, 2026.