For decades, if consumers were feeling pretty good about the economy, you could bet that they’d be spending – and that would show up in the stock market.
Today, not so much. The gap between consumer sentiment and the stock market is as wide as it has been since records began:
A trend that started during the pandemic, consumer sentiment’s disconnect from the stock market, has increased dramatically. (Source: The Kobeissi Letter)
What gives?
You might think it’s the AI bubble on Wall Street, or fear of AI taking everyday jobs… or that consumer spending isn’t as high a percentage of the economy as it once was.
You’d be incorrect on all counts.
The AI bubble in stocks didn’t begin in earnest until late 2023 with the launch of OpenAI’s ChatGPT. Job displacement due to intelligent robots has largely been headline fiction thus far.
And owing largely to the growth of easy credit, the share of consumers in the overall economy has steadily increased from 62% in the early Reagan years to 71.9% through the 2010s.
You might even think that the data is increasingly skewed politically. But that’s not accurate either.
During the Biden years, consumers were consistently gaslit on data skewed to account for government spending. You remember the so-called “vibe-session”?
Since President Donald Trump began his second term in 2025, sentiment flipped with a disproportionate representation of Democrats polled seeing anything in the Trump economy – tariffs, reversal of energy policies, war in Iran – as reasons for gloom and doom.
What’s really going on? A disproportionate number of baby boomers who own the nation’s wealth – stocks and real estate – continue to keep up their spending in the real economy.
Generation X lags the boomers in asset accumulation. They lag in spending, too
As a cohort, millennials and Gen Z have largely been boxed out of the real estate market, do not own a healthy amount of stocks or small business and have been raised on their phones and credit.
During the period from 1998 to 2002, when the baby boomers first started collecting Social Security, consumer sentiment became increasingly sensitive to stock market movements in the dot-com boom and bust, with roughly 20% of the change in confidence attributable to market fluctuations.
Even during the 2008 financial crisis, when both the stock market and consumer sentiment tanked, you didn’t have such a pronounced disparity.
Today, 18 to 45 year olds, a prime target for consumer marketing, feel left out of a booming stock market with a high concentration in tech and financial stocks.
The young ones don’t have a dog in the fight… and don’t feel like they will any time soon.
Something’s gotta give. We’re either going to see the greatest transfer of wealth in human history when baby boomers give way to Gen X … or its greatest destruction as the line for those assets disappears.
~ Addison
P.S. Last week’s Grey Swan Live! with Dr. Mark Skousen yielded a romp through political and economic “liberty” from the signing of the Declaration of Independence and the 25o-year anniversary of Adam’s Smith’s Wealth of Nations – with a strong detour through the renaissance accomplishments of Benjamin Franklin – all the way to Elon Musk and the entrepreneurs leading the U.S. economy into the AI and space age.
As America celebrates its 250th anniversary this year, Mark is gathering renowned guests for The World’s Fair of Liberty – this year’s theme for FreedomFest – in Las Vegas, July 8-11, 2026.
FreedomFest is easily the most unique gathering of economists, historians, money managers, policymakers and iconoclasts held each year. The Anthem film festival, held in tandem, brings together filmmakers and creative types from all over the world.
If you haven’t been, or want to return this year, the event promises to be a fantastic gathering in honor of America’s 250th anniversary. Check out the details here. (***During our conversation, Mark went into some detail on the discounts he was able to secure at Las Vegas hotels exclusively for attendees to this year’s event.)
In the meantime, you can watch the replay of Grey Swan Live! Mark Skousen in the members section of the Grey Swan website. If you’re not already a member, click here to join our latest livestream.
