The latest biweekly reading of the Penta-CivicScience Economic Sentiment Index (ESI) rose by 0.2 points, from 31.7 to 31.9, at the start of the third quarter of 2025 and following the first government shutdown since 2019.
Three of the ESI’s five indicators increased during this period. Confidence in finding a new job increased the most, increasing 1.8 points to 27.4.
—Confidence in the overall U.S. economy increased 1.3 points to 31.9.
—Confidence in making a major purchase increased 0.3 points to 25.4.
—Confidence in buying a new home decreased 0.4 points to 24.6.
—Confidence in personal finances decreased 1.8 points to 50.1.
On October 1, the federal government formally entered a partial shutdown after Congress failed to pass needed appropriations bills to keep the government running. The Congressional Budget Office estimated that about 750,000 federal employees have been furloughed due to this lapse in funding and that many others are continuing to work without pay.
The White House budget office has reportedly directed agencies to begin identifying and drafting potential reduction in force (RIF) plans—contingency measures that, if implemented, would extend beyond furloughs to include layoffs of federal employees during the government shutdown. The government shutdown is also delaying the release of critical U.S. economic indicators such as the September Jobs Report that was due to be released on October 3. If the shutdown continues, additional data such as the Consumer Price Index could also be delayed. This comes at a precarious time for the U.S. economy, as evidence of a potential slowdown in hiring has prompted the Federal Reserve to restart cutting interest rates.
The Fed’s preferred inflation gauge, the core personal consumption expenditures (PCE) price index, held steady at 2.9 percent year-over-year in August, with a 0.2 percent monthly gain. The overall PCE rose 0.3 percent for the month, nudging annual inflation to 2.7 percent, while personal income and spending exceeded expectations at 0.4 percent and 0.6 percent respectively. Despite the Fed’s two percent inflation target, the data is unlikely to shift the central bank’s projected course of two more rate cuts by the end of 2025.
On September 25, the Bureau of Economic Analysis released their third estimate of second quarter real gross domestic product (GDP) for 2025, showing that real GDP increased at an annual rate of 3.8 percent. This reflects a 0.5 percentage point increase from the second estimate due to upward revisions for consumer spending. The overall increase in real GDP can be attributed to an increase in consumer spending and a decrease in imports, which were partly offset by a decrease in investment and exports.
On September 24, the U.S. Census Bureau released August residential sales data, showing a seasonally-adjusted annual rate of 800,000 sales of new single-family homes—20.5 percent above the July 2025 rate of 664,000. The seasonally-adjusted estimate of new houses for sale was 490,000—1.4 percent below the July 2025 estimate of 497,000. The median sales price of new houses sold in August was $413,500 (versus $395,100 in July), and the average sales price of new houses sold in August was $534,100 (versus $478,200 in July).
The ESI’s three-day moving average began this two-week stretch at 32.8 on September 24. It then rose to a two-week high of 36.0 on September 26 and then steadily declined to a low of 28.9 on October 4, before rising again to 32.6 to close out the session.
The next release of the ESI will be on Wednesday, October 22, 2025.