There’s a disconnect between the stock market and consumer optimism — and some economists say affordability is a primary culprit.
Over the last four to five years, the stock market has become divorced from consumer sentiment: Stock valuations have soared while consumer optimism has plunged to near-record lows, economists said.
The dynamic is atypical, said Joe Seydl, a senior markets economist at J.P. Morgan Private Bank.
Prior to 2022, stock markets and consumer sentiment largely moved in sync, shifting up and down based on prevailing economic conditions, Seydl said, based on an analysis of data dating to the early 1990s. When times were good, both moved upwards in tandem, and vice versa.
“It really breaks the 25-year relationship between the two series,” Seydl said.
