Stock Market Surges While Consumer Optimism Falls

Economists say the U.S. stock market has decoupled from consumer sentiment over the past four to five years, with valuations soaring while the University of Michigan consumer sentiment index sits near multi-decade lows. Analyses from J.P. Morgan and Oxford Economics (Jan. 27) point to affordability — higher prices, elevated mortgage costs and a cooled labor market — as the primary driver. The divergence may influence consumer spending, policy and the 2026 midterms.