Recent polls and surveys reveal a significant decline in US consumer sentiment, even as the stock market continues to experience unprecedented growth. A graphic shared by The Kobeissi Letter illustrates the stark contrast between consumer sentiment—tracked by the University of Michigan’s Surveys of Consumers—and the S&P 500 stock index over the past 30 years. Historically, these two metrics exhibited a close relationship until around 2020. Notably, both measures diverged sharply prior to the 2008 financial crisis, when the stock market briefly outperformed consumer sentiment before crashing as the housing bubble burst.
In the past six years, however, the S&P 500 has surged by approximately 130%, while consumer sentiment has plummeted by 55%, reaching its lowest point since records began in 1952. This disparity has garnered attention, with The Kobeissi Letter describing the situation as “absolutely incredible,” indicating a growing wealth divide that may be the largest in modern history.
The University of Michigan’s latest survey reported that consumer sentiment has reached an all-time low, with director Joanne Hsu stating that 57% of respondents cited high prices as significantly impairing their personal finances, an increase from 50% the previous month. Additionally, a Gallup survey revealed that American confidence in the economy has dipped to its lowest point since October 2022, with only 16% of respondents rating the economy as excellent or good; conversely, nearly half categorized it as poor.
Political implications of this economic sentiment are also emerging. Recent polling from The Associated Press highlighted that even among Republicans, optimism toward the economy has soured, with support for President Donald Trump’s economic policies slipping from 80% to around 60% in just three months. This shift in sentiment could be detrimental for Trump and the Republican Party, as midterm elections loom in the backdrop of economic concerns.
This growing divide between consumer sentiment and stock market performance reflects broader patterns in consumer spending. As reported by The Financial Times, the wealthiest 10% of earners in the United States now account for nearly half of all consumer spending, starkly contrasting with the bottom 80% of earners, who collectively contribute less than 40%. A February report from economist Ksenia Bushmeneva of TD Economics noted that the gap between high-income households and others widened last year, highlighting the benefits that upper-income households experienced through robust wage growth, rising equity markets, and better access to credit.
This discrepancy raises pressing questions about the sustainability of the current economic model and the potential social consequences of an ever-widening wealth gap. As the stock market flourishes, the palpable decline in consumer sentiment suggests an underlying fragility in the economy that policymakers will need to address as they consider strategies for future recovery and stability.
