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A trader works as the Dow Jones Industrial Average surpasses the 50,000 mark on the floor at the New York Stock Exchange (NYSE) in New York City, U.S., Feb. 6, 2026.<\/p>\n
Brendan McDermid | Reuters<\/p>\n<\/div>\n<\/div>\n<\/div>\n
There’s a disconnect between the stock market and consumer optimism \u2014 and some economists say affordability is a primary culprit<\/a>.<\/p>\n Over the last four to five years, the stock market has become divorced from consumer sentiment: Stock valuations have soared<\/a> while consumer optimism has plunged to near-record lows<\/a>, economists said. <\/p>\n The dynamic is atypical, said Joe Seydl, a senior markets economist at J.P. Morgan Private Bank. <\/p>\n Prior to 2022, stock markets and consumer sentiment largely moved in sync, shifting up and down based on prevailing economic conditions, Seydl said, based on an analysis of data dating to the early 1990s<\/a>. When times were good, both moved upwards in tandem, and vice versa. <\/p>\n “It really breaks the 25-year relationship between the two series,” Seydl said.<\/p>\n<\/div>\n A separate analysis by Oxford Economics found a similar dynamic. <\/p>\n The University of Michigan’s consumer sentiment index should have ended 2025 at a value of 93, based on indicators like stock prices, unemployment and inflation, according to that Oxford Economics study, published Jan. 27. Instead, it was 40 points lower, near an all-time low. <\/p>\n “Historically, household perceptions of the economy closely tracked key macroeconomic indicators,” according to Oxford Economics. “Today, those indicators suggest consumers should be feeling significantly more upbeat than they do.”<\/p>\n<\/div>\n Measuring how consumers feel \u2014 and how that sentiment relates to the stock market and broad economy \u2014 is important since consumer spending accounts for the bulk of U.S. economic output, said John Canavan, lead analyst at Oxford Economics.<\/p>\n The so-called “vibecession<\/a>” \u2014 or the sour mood \u2014 among consumers is likely due to their views on affordability, Seydl said. <\/p>\n “Affordability is sort of this catch-all term for widespread dissatisfaction by consumers of current economic outcomes,” Seydl said. <\/p>\n<\/div>\n The dynamic could have repercussions for the overall economy, the outcome of upcoming midterms in November and policies pursued by lawmakers ahead of those elections, analysts said. <\/p>\n “Affordability was important in the 2024 election,” Seydl said. “The thing that helped [Republicans] do so well [in that election] is now a potential vulnerability as we head into the 2026 midterm elections.”<\/p>\n “The [Trump] administration is hyper-focused on this,” he said. <\/p>\n<\/div>\n There are many factors driving the eroded sense of economic well-being, economists said. <\/p>\n Among them are higher prices, housing affordability and a cooldown in the job market. <\/p>\n While inflation has throttled back<\/a>, the overall price level for U.S. goods and services is much higher than it was before the Covid-19 pandemic, Seydl said. <\/p>\n Average consumer prices increased by about 26%<\/a> from December 2019 to December 2025, according to data from the Bureau of Labor Statistics.<\/p>\n<\/div>\nImpacts of the ‘vibecession’<\/h2>\n
Why affordability is a concern<\/h2>\n
Overall prices are ‘sharply higher’<\/h3>\n