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Yesterday the S&P 500 closed at 7,519. All-time record. The Nasdaq hit 26,656. Also a record. Micron crossed a trillion-dollar market cap for the first time. If you own stocks, Tuesday was a very good day.
Now look at the other number. The University of Michigan’s Consumer Sentiment Index — the standard measure of how regular Americans feel about the economy — just hit 44.8. That’s the lowest reading since the survey started in 1952. Lower than the 2008 financial crisis. Lower than COVID lockdowns. Lower than when inflation hit 9% in 2022.
Let me put that differently. At the worst point of 2008 — when Lehman Brothers collapsed and your 401(k) lost 40% — people were more optimistic than they are right now.
Most people look at the stock market and assume the economy is fine. But the stock market isn’t the economy. It’s a scoreboard for the 500 biggest companies in the country — many of which are making a fortune from AI right now. Meanwhile, 57% of consumers told Michigan that high prices are eating into their personal finances. Two-thirds told the Conference Board they’re cutting back on spending. Gas is expensive. Groceries are expensive. Insurance is expensive. The stock ticker says one thing. The grocery receipt says another.
And here’s the part that really gets me. Year-ahead inflation expectations jumped to 4.8%. Long-run expectations hit 3.9% — the highest in years. People aren’t just unhappy about today’s prices. They’re losing faith that prices will come back down at all.
Historically, when there’s a gap this wide between how Wall Street feels and how Main Street feels, something eventually gives. Sometimes stocks come down. Sometimes the economy catches up. But a gap like this doesn’t sit still for long.
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