The latest biweekly reading of the Penta-CivicScience Economic Sentiment Index (ESI) ticked up slightly by 0.1 point to 30.7 despite rising inflation, elevated mortgage rates, and continued uncertainty in energy markets.
Three of the ESI’s five indicators increased during this period. Confidence in personal finances increased the most, rising 2.8 points to 51.8.
—Confidence in buying a new home increased 0.6 points to 24.3.
—Confidence in the overall U.S. economy increased 0.5 points to 30.9.
—Confidence in finding a new job decreased 1.1 points to 26.3.
—Confidence in making a major purchase decreased 2.3 points to 20.3
The Bureau of Economic Analysis released its April Personal Consumption Expenditures (PCE) data, showing that the U.S. inflation rate accelerated at its fastest annual pace in three years as higher energy costs continued to weigh on consumers. The PCE price index increased 3.8 percent year-over-year, up from a 3.5 percent annual increase in March. Core PCE, which excludes food and energy, increased 3.3 percent year-over-year. Additionally, the personal saving rate fell to 2.6 percent, suggesting that households are increasingly drawing on savings to keep pace with higher prices.
Mortgage rates also remained elevated during this period, creating additional affordability challenges for prospective homebuyers. Freddie Mac reported that the average 30-year fixed mortgage rate increased to 6.53 percent during the week ending May 28, its highest level in nine months and up from 6.51 percent the week before. These higher rates weighed on the housing market during what is typically the busiest home-buying season of the year, with new home sales falling 6.2 percent in April to a seasonally adjusted annual rate of 622,000.
Oil prices remained volatile amid conflicting signals over U.S.-Iran ceasefire talks and the potential reopening of the Strait of Hormuz. On May 27, oil prices fell to roughly $89 per barrel following reports that a potential peace agreement could reopen the strait. However, prices climbed again soon after as markets weighed continued uncertainty over negotiations and the timeline for restoring normal shipping activity. Higher energy prices have contributed to broader inflationary pressure, complicating the Federal Reserve’s goal on interest rates and adding another source of strain for consumers and businesses.
The ESI’s three-day moving average fell early in the period, rebounded, and then fluctuated before closing just below 31. It began the session at 30.1 on May 20 before declining to a low of 28.5 on May 23. It then rose to a high of 33.2 on May 27 before declining to 30.2 on May 30. The three-day moving average then oscillated before ending the session at 30.9 on June 2.
The next release of the ESI will be on Wednesday, June 17, 2026.