The Market Has Never Felt Better. Americans Have Never Felt Worse.
The S&P is at an all-time high. Consumer sentiment is at an all-time low. Here's why both are true.
The stock market just hit an all-time high.
Consumer sentiment just hit an all-time low.
At the same time. Simultaneously. Those two things are happening right now.
Let that sink in for a second.
The University of Michigan Consumer Sentiment Index goes back to 1952. Over 70 years of data covering wars, recessions, pandemics, and inflation spikes. Americans are feeling worse about the economy right now than they did during COVID, the financial crisis, and the aftermath of 9/11.
I’ll be honest. That one got me. Really?
And yet, here’s the S&P sitting near record highs. So which is it?
Both actually. That’s the whole point.
The K-Shaped Economy Isn’t a Theory Anymore
You’ve heard the term. The K-shaped recovery. One group going up, one group going down, the gap between them widening every year.
We’re not debating whether it exists anymore. We’re watching it play out in real time.
If you own assets, things are good. Great actually.
Your 401K is up. The AI trade is minting wealth at a staggering pace, and if you hold any of the companies powering it, you’ve had a front row seat to one of the greatest wealth creation events in history.
Even if you’ve done absolutely nothing except own a home, you’re up substantially since COVID. Your exterior paint job could be peeling. Doesn’t matter. Property values have surged regardless.
If you don’t own assets? You’re getting squeezed from every direction.
Most Americans Are Invested. But Not Equally.
Here’s a chart worth pausing on. Most Americans (62%) own stocks in some form, whether directly or through a retirement account or mutual fund.
That sounds encouraging. But stock ownership is wildly uneven. The top 10% of earners now account for nearly half of all consumer spending in this country. The bottom 80% are losing ground. That gap has been opening for decades and has accelerated sharply since 2020.
The people feeling good right now are the ones who own the most. That’s not a coincidence.
The Cracks Beneath the Surface
Now here’s where it starts to get uncomfortable.