Stock market and consumer sentiment diverge more than ever

Well, since consumer sentiment has been measured, anyway. This is not at all surprising.

Multiple polls and surveys released in recent days have shown US consumer sentiment cratering—and all the while, the US stock market keeps hitting record highs.

…up until around 2020, consumer sentiment matched stock market performance closely, although there was a large divergence between the two leading up to the 2008 financial crisis, where stocks briefly outperformed consumer sentiment before crashing downward as the housing bubble burst.

But throughout the last six years, the graphic shows, the S&P 500 has produced an almost continuous upward surge even as consumer sentiment spirals downward.

“Absolutely incredible,” commented Kobeissi Letter. “Over the last six years, the S&P 500 has risen +130% while US Consumer Sentiment has collapsed by -55%, to its lowest since data began in 1952. We are witnessing the formation of the biggest wealth divide in modern history.” - Common Dreams

It's hard to see the economy not tanking

I generally agree with David Dayen, and I certainly do so here.

Most of this picture is mixed and influenced by a bunch of different factors. But we can say one thing definitively: Hiring has been relatively dormant since Trump took the oath of office. Only 597,000 jobs have been added in the first seven months of the year, a 44 percent drop from the first seven months of 2024, as former Biden economist Heather Boushey notes. The year has seen low hiring and a low quit rate, as people hunker down in the jobs they have. There are fewer entry-level positions and Americans aren’t moving very much for work. That’s a housing story but it’s also a job security story, and the expectations are even worse: The University of Michigan survey shows expectations for a higher unemployment rate next year at the highest level since the Great Recession…

The insecurity gripping American workers has kept wages stagnant, up just 0.1 percent last month. (It took the Wall Street Journal editorial board, of all places, to point this out.) That means that wages aren’t keeping pace with prices, which is what really matters with the cost of living.

On top of this, a host of nontariff policy changes are squeezing or poised to squeeze ordinary Americans. The Peterson-KFF Health System Tracker now estimates that the median health insurance plan in the Affordable Care Act marketplaces is going up 18 percent in 2026, and that understates the impact, because the expiration of enhanced ACA premium subsidies will make this feel much worse. Student loan payment resumption bites so deep for the millions of student borrowers that many are just ignoring the bills, which is likely to lead to intrusive collections and garnishing of wages. The Big Tech obsession, fueled by the Trump administration, to frantically build data centers (and keep the stock market high) is leading to soaring electricity prices, which Trump’s policy to kill any renewable source of energy will only worsen. - The American Prospect

Working from home is still very much an option

With all the headlines about people being pointlessly - indeed, worse than pointlessly - forced back into workplaces, you may have gained a different impression.

Five years after the COVID-19 pandemic disrupted office life, American workplaces are settling into a new rhythm. Employees in remote-friendly jobs now spend an average of 2.3 days each week working from home, a research team that tracks remote employment has found. And when you look at all workers – and not just those in remote-friendly positions – they’re working remotely 1.4 days a week, or 28% of the time.

That’s a huge change from 2019, when remote work accounted for only 7% of the nation’s paid workdays, even if it’s down from the height of the pandemic in 2020, when 61.5% of all work was remote. And it’s a giant leap from 1965, the dawn of telework. At that time, fewer than 0.5% of all paid workdays were out of the office, according to the Bureau of Labor Statistics.

As management professors who study remote work and collaboration, we’ve learned a lot about remote work’s challenges and its often underappreciated advantages. In analyzing the latest data, we’ve observed that employers and employees are still trying to strike the balance between working from home and at the office. That’s why employers’ requirements for in-person work don’t always align with their employees’ preferences. - The Conversation