Economic sentiment continued to weaken as the latest biweekly reading of the Penta-CivicScience Economic Sentiment Index (ESI) fell 0.2 points to 27.8, its fourth straight biweekly decline and a new record low.
—Confidence in finding a new job decreased 0.6 points to 24.4.
—Confidence in making a major purchase remained unchanged at 19.2.
—Confidence in buying a new home increased 0.6 points to 20.9.
—Confidence in the overall U.S. economy increased 1.8 points to 28.0.
Mortgage rates continued to increase during the period, adding to affordability challenges for prospective homebuyers. Freddie Mac reported that the average 30-year fixed mortgage rate rose to 7.28 percent during the week ending October 1, its highest level since November 2023 and up from 6.34 percent a year earlier. Affordability pressures extended beyond housing, as inflation remained elevated in August. The Bureau of Economic Analysis (BEA) reported that the August Personal Consumption Expenditures (PCE) price index increased 0.3 percent during the month and 3.4 percent year-over-year, remaining above the Federal Reserve's 2 percent target. Core PCE, which excludes volatile food and energy prices, increased 3.0 percent annually.
Nevertheless, consumer spending remained resilient despite elevated prices, with personal consumption expenditures increasing 0.9 percent in August. Looking back to earlier in the year, GDP estimates for the second quarter showed stronger growth than previously estimated. BEA reported that real GDP increased at an annual rate of 2.2 percent, up from its previous estimate of 1.5 percent. The revision primarily reflected stronger investment, consumer spending, and government spending than previously estimated. First quarter growth was also revised upward to 2.5 percent from 2.1 percent.
The September Jobs Report showed that U.S. employers added just 29,000 jobs, well below economists' expectations of 90,000, while the unemployment rate increased slightly to 4.2 percent from 4.1 percent. July and August payroll gains were also revised downward by a combined 60,000 jobs, with July now showing a loss of 10,000 jobs. Financial markets rose following the report as the weaker-than-expected labor market data reduced expectations for another Fed rate increase at its October meeting.
The ESI’s three-day moving average saw two notable declines over the period, separated by a strong rebound that peaked in early October. It began at 28.1 on September 23 before falling to a low of 26.1 on September 26. It then trended upward, rising to a high of 29.8 on October 5 before falling to 28.4 on October 6 to close out the session.
The next release of the ESI will be on Wednesday, October 21, 2026.
.