Consumers Are Optimistic About the Market, But Cautious on Economy
Recent consumer survey data has revealed a widening gap between how consumers view the stock market and the economy.
For your convenience, we’ve also provided a PDF copy of the Chart of the Month | Consumers Are Optimistic About the Market, But Cautious on Economy
The dark blue line tracks the percentage of consumers who believe the stock market will rise over the next year, while the light blue line shows the University of Michigan’s Consumer Expectations Index, which measures outlooks for income, employment, and overall economic conditions. Historically, these two series move together: when consumers feel better about the economy, they feel better about the stock market. However, that relationship has broken down this year. Nearly 60% of consumers expect the stock market to rise, while the expectations index sits near levels from the pandemic and the 2008 financial crisis. The takeaway: confidence in the stock market has rebounded, but overall sentiment remains weak.
Consumers are increasingly optimistic about the stock market. The S&P 500 has set over 20 new all-time highs since the end of May, and investors expect more gains. Corporate earnings have proven resilient, and the artificial intelligence industry is driving both economic and earnings growth as hundreds of billions are invested in AI infrastructure. Trade policy uncertainty has eased from earlier this year, and the Federal Reserve’s September rate cut reinforced expectations for a “soft landing”, where the economy slows but avoids a recession. Many households have directly benefited from the market’s gains through investment and retirement accounts, boosting confidence despite mixed signals from the economy and labor market.
While consumers are confident in the stock market, they are cautious about the economy. Housing affordability remains a major concern, with elevated mortgage rates and high home prices. Inflation has moderated from its peak, but it continues to pressure household budgets, especially for essentials like food, healthcare, and rent. Meanwhile, the labor market has cooled after a post-pandemic surge, when demand for workers outpaced supply and companies raised wages. Job growth has slowed, the number of job openings has declined, and unemployment has risen, leaving some workers less certain about future income and employment prospects. The result is growing unease about household finances, despite record stock prices.
It’s rare to see such a wide gap between consumers’ views of the stock market and the broader economy. The divergence highlights a key tension: confidence in markets is rising, but many households continue to feel pressure from housing costs, inflation, and labor market uncertainty. The gap matters because the consumer accounts for roughly 70% of all U.S. economic activity. If sentiment remains weak, it could begin to weigh on consumer spending, which has supported economic growth, and the optimism that’s powered the stock market to new highs.
Disclosure
The information and opinions provided herein are provided as general market commentary only – not financial advice – and are subject to change at any time without notice. This commentary may contain forward-looking statements that are subject to various risks and uncertainties. None of the events or outcomes mentioned here may come to pass, and actual results may differ materially from those expressed or implied in these statements. No mention of a particular security, index, or other instrument in this report constitutes a recommendation to buy, sell, or hold that or any other security, nor does it constitute an opinion on the suitability of any security or index. The report is strictly an informational publication and has been prepared without regard to the particular investments and circumstances of the recipient.
Past performance does not guarantee or indicate future results. Any index performance mentioned is for illustrative purposes only and does not reflect any management fees, transaction costs, or expenses. Indexes are unmanaged, and one cannot invest directly in an index. Index performance does not represent the actual performance that would be achieved by investing in a fund.
See Full Disclosures Page
Concerns or questions about how your investment portfolio will hold up in the current market environment? Contact Financial Synergies today.
We are a boutique, financial advisory and total wealth management firm with over 35 years helping clients navigate turbulent markets. To learn more about our approach to investment management please reach out to us. One of our seasoned advisors would be happy to help you build a custom financial plan to help ensure you accomplish your financial goals and objectives. Schedule a conversation with us today.
More relevant articles by Financial Synergies:
Blog Disclosures
This content, which may contain security-related opinions and/or information, is provided for informational purposes only and should not be relied upon in any manner as professional advice, or an endorsement of any practices, products or services. There can be no guarantees or assurances that the views expressed here will be applicable for any particular facts or circumstances, and should not be relied upon in any manner. You should consult your own financial advisors as to legal, business, tax, and other related matters concerning any investment.
The commentary in this “post” (including any related blogs, videos, and social media) reflects the personal opinions, viewpoints, and analyses of the Financial Synergies Wealth Advisors, Inc. employees providing such comments, and should not be regarded as the views of Financial Synergies Wealth Advisors, Inc. or its respective affiliates or as a description of advisory services provided by Financial Synergies Wealth Advisors, Inc. or performance returns of any Financial Synergies Wealth Advisors, Inc. client.
Any opinions expressed herein do not constitute or imply endorsement, sponsorship, or recommendation by Financial Synergies Wealth Advisors, Inc. or its employees. The views reflected in the commentary are subject to change at any time without notice.
Nothing on this website or Blog constitutes investment or financial planning advice, performance data or any recommendation that any particular security, portfolio of securities, transaction or investment strategy is suitable for any specific person. It also should not be construed as an offer soliciting the purchase or sale of any security mentioned. Nor should it be construed as an offer to provide investment advisory services by Financial Synergies Wealth Advisors, Inc.
Any mention of a particular security and related performance data is not a recommendation to buy or sell that security. Financial Synergies Wealth Advisors, Inc. manages its clients’ accounts using a variety of investment techniques and strategies, which are not necessarily discussed in the commentary. Investments in securities involve the risk of loss. Past performance is no guarantee of future results.
Any charts provided here or on any related Financial Synergies Wealth Advisors, Inc. personnel content outlets are for informational purposes only, and should also not be relied upon when making any investment decision. Any indices referenced for comparison are unmanaged and cannot be invested into directly. As always please remember investing involves risk and possible loss of principal capital; please seek advice from a licensed professional. Any projections, estimates, forecasts, targets, prospects and/or opinions expressed in these materials are subject to change without notice and may differ or be contrary to opinions expressed by others. Information in charts have been obtained from third-party sources and data, and may include those from portfolio securities of funds managed by Financial Synergies Wealth Advisors, Inc. While taken from sources believed to be reliable, Financial Synergies Wealth Advisors, Inc. has not independently verified such information and makes no representations about the enduring accuracy of the information or its appropriateness for a given situation. All content speaks only as of the date indicated.
Financial Synergies Wealth Advisors, Inc. is a registered investment adviser. Advisory services are only offered to clients or prospective clients where Financial Synergies Wealth Advisors, Inc. and its representatives are properly licensed or exempt from licensure. Investments in securities involve the risk of loss. Past performance is no guarantee of future results.
See Full Disclosures Page Here
Chart of the Month | Consumers Are Optimistic About the Market, But Cautious on Economy
Consumers Are Optimistic About the Market, But Cautious on Economy
Recent consumer survey data has revealed a widening gap between how consumers view the stock market and the economy.
For your convenience, we’ve also provided a PDF copy of the Chart of the Month | Consumers Are Optimistic About the Market, But Cautious on Economy
The dark blue line tracks the percentage of consumers who believe the stock market will rise over the next year, while the light blue line shows the University of Michigan’s Consumer Expectations Index, which measures outlooks for income, employment, and overall economic conditions. Historically, these two series move together: when consumers feel better about the economy, they feel better about the stock market. However, that relationship has broken down this year. Nearly 60% of consumers expect the stock market to rise, while the expectations index sits near levels from the pandemic and the 2008 financial crisis. The takeaway: confidence in the stock market has rebounded, but overall sentiment remains weak.
Consumers are increasingly optimistic about the stock market. The S&P 500 has set over 20 new all-time highs since the end of May, and investors expect more gains. Corporate earnings have proven resilient, and the artificial intelligence industry is driving both economic and earnings growth as hundreds of billions are invested in AI infrastructure. Trade policy uncertainty has eased from earlier this year, and the Federal Reserve’s September rate cut reinforced expectations for a “soft landing”, where the economy slows but avoids a recession. Many households have directly benefited from the market’s gains through investment and retirement accounts, boosting confidence despite mixed signals from the economy and labor market.
While consumers are confident in the stock market, they are cautious about the economy. Housing affordability remains a major concern, with elevated mortgage rates and high home prices. Inflation has moderated from its peak, but it continues to pressure household budgets, especially for essentials like food, healthcare, and rent. Meanwhile, the labor market has cooled after a post-pandemic surge, when demand for workers outpaced supply and companies raised wages. Job growth has slowed, the number of job openings has declined, and unemployment has risen, leaving some workers less certain about future income and employment prospects. The result is growing unease about household finances, despite record stock prices.
It’s rare to see such a wide gap between consumers’ views of the stock market and the broader economy. The divergence highlights a key tension: confidence in markets is rising, but many households continue to feel pressure from housing costs, inflation, and labor market uncertainty. The gap matters because the consumer accounts for roughly 70% of all U.S. economic activity. If sentiment remains weak, it could begin to weigh on consumer spending, which has supported economic growth, and the optimism that’s powered the stock market to new highs.
Disclosure
The information and opinions provided herein are provided as general market commentary only – not financial advice – and are subject to change at any time without notice. This commentary may contain forward-looking statements that are subject to various risks and uncertainties. None of the events or outcomes mentioned here may come to pass, and actual results may differ materially from those expressed or implied in these statements. No mention of a particular security, index, or other instrument in this report constitutes a recommendation to buy, sell, or hold that or any other security, nor does it constitute an opinion on the suitability of any security or index. The report is strictly an informational publication and has been prepared without regard to the particular investments and circumstances of the recipient.
Past performance does not guarantee or indicate future results. Any index performance mentioned is for illustrative purposes only and does not reflect any management fees, transaction costs, or expenses. Indexes are unmanaged, and one cannot invest directly in an index. Index performance does not represent the actual performance that would be achieved by investing in a fund.
See Full Disclosures Page
Concerns or questions about how your investment portfolio will hold up in the current market environment? Contact Financial Synergies today.
We are a boutique, financial advisory and total wealth management firm with over 35 years helping clients navigate turbulent markets. To learn more about our approach to investment management please reach out to us. One of our seasoned advisors would be happy to help you build a custom financial plan to help ensure you accomplish your financial goals and objectives. Schedule a conversation with us today.
More relevant articles by Financial Synergies:
Blog Disclosures
This content, which may contain security-related opinions and/or information, is provided for informational purposes only and should not be relied upon in any manner as professional advice, or an endorsement of any practices, products or services. There can be no guarantees or assurances that the views expressed here will be applicable for any particular facts or circumstances, and should not be relied upon in any manner. You should consult your own financial advisors as to legal, business, tax, and other related matters concerning any investment.
The commentary in this “post” (including any related blogs, videos, and social media) reflects the personal opinions, viewpoints, and analyses of the Financial Synergies Wealth Advisors, Inc. employees providing such comments, and should not be regarded as the views of Financial Synergies Wealth Advisors, Inc. or its respective affiliates or as a description of advisory services provided by Financial Synergies Wealth Advisors, Inc. or performance returns of any Financial Synergies Wealth Advisors, Inc. client.
Any opinions expressed herein do not constitute or imply endorsement, sponsorship, or recommendation by Financial Synergies Wealth Advisors, Inc. or its employees. The views reflected in the commentary are subject to change at any time without notice.
Nothing on this website or Blog constitutes investment or financial planning advice, performance data or any recommendation that any particular security, portfolio of securities, transaction or investment strategy is suitable for any specific person. It also should not be construed as an offer soliciting the purchase or sale of any security mentioned. Nor should it be construed as an offer to provide investment advisory services by Financial Synergies Wealth Advisors, Inc.
Any mention of a particular security and related performance data is not a recommendation to buy or sell that security. Financial Synergies Wealth Advisors, Inc. manages its clients’ accounts using a variety of investment techniques and strategies, which are not necessarily discussed in the commentary. Investments in securities involve the risk of loss. Past performance is no guarantee of future results.
Any charts provided here or on any related Financial Synergies Wealth Advisors, Inc. personnel content outlets are for informational purposes only, and should also not be relied upon when making any investment decision. Any indices referenced for comparison are unmanaged and cannot be invested into directly. As always please remember investing involves risk and possible loss of principal capital; please seek advice from a licensed professional. Any projections, estimates, forecasts, targets, prospects and/or opinions expressed in these materials are subject to change without notice and may differ or be contrary to opinions expressed by others. Information in charts have been obtained from third-party sources and data, and may include those from portfolio securities of funds managed by Financial Synergies Wealth Advisors, Inc. While taken from sources believed to be reliable, Financial Synergies Wealth Advisors, Inc. has not independently verified such information and makes no representations about the enduring accuracy of the information or its appropriateness for a given situation. All content speaks only as of the date indicated.
Financial Synergies Wealth Advisors, Inc. is a registered investment adviser. Advisory services are only offered to clients or prospective clients where Financial Synergies Wealth Advisors, Inc. and its representatives are properly licensed or exempt from licensure. Investments in securities involve the risk of loss. Past performance is no guarantee of future results.
See Full Disclosures Page Here
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