A Moment of Low Consumer Confidence — and What’s Behind It

In the most recent episode of Well-Balanced, Vector’s Jason Ranallo discusses the latest drop in U.S. consumer sentiment. November’s reading from the University of Michigan fell to 50.3, the second-lowest point since the pandemic recovery. The decline spanned age groups, income levels, and political affiliations — though households with larger stock ownership were noticeably more optimistic after a strong market year.

Uncertainty continues to be the biggest drag. Concerns around the government shutdown and signs of a cooling labor market have made consumers hesitant heading into the holidays. Yet inflation expectations — how we believe future prices will behave — remain fairly steady.

Economic Cycles vs. Market Cycles

Cycles are normal. Historically:

(*based on the S&P 500 index over the last ~100 years)

Each downturn feels unique while we’re in it — the 1970s, the dot-com era, the financial crisis, the pandemic — yet markets have recovered every time, often stronger than before.

Where Things Stand Today

Despite low sentiment, several fundamentals remain supportive:

Periods like this — when confidence is low but fundamentals are stabilizing — have historically preceded some of the strongest one-year market returns.

A Framework for Uncertain Environments

Two core principles that guide Vector’s planning approach:

Take Aways

Low consumer confidence doesn’t always signal weakness in markets. Sometimes, it simply reflects uncertainty during transition — and history shows that patient, long-term investors have often benefited by sticking to the plan.

If you’d like to review how your own financial buckets are positioned for the next few years, feel free to reach out.

And if you found this helpful, share this Well-Balanced episode with anyone who might appreciate the perspective.

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