Does a Rising Tide Lift All Ships?

In the face of global and economic uncertainty, the market continues to rise steadily, with most major indices up roughly 10% this year. Interestingly, then, how is it that consumer sentiment — which includes consumers’ feelings and expectations about their personal finances, the future of the economy, and buying conditions – is near one of the lowest levels in the past 25 years and comparable to the ‘08/’09 Great Financial Crisis? With the market near all-time highs, unemployment at relatively low levels (though it’s starting to increase), and corporate profits steadily climbing, one might think that consumers would be feeling a bit “better” than what the survey results suggest.

However, once we look past the averages, we can see that based on various income levels, the results are anything but average, and maybe reinforce that, to some degree, money can buy happiness…at least according to the survey:

If consumers are generally pessimistic about their current and future situation—and people tend to spend less when they feel uncertain—then how has U.S. economic growth managed to hold up, given that nearly 70% of GDP depends on consumer spending?

Those with the means to spend are doing more of it as the top 10% of income earners now account for 50% of all consumer spending.

(Bloomberg)

Finally, even though it was noted that the market is near an all-time high, and at face value, should be great for all involved, unfortunately, not all are involved:

(Gallup Poll)

As we move into the third quarter, there is growing anticipation around the upcoming earnings reports and management commentary from publicly traded companies. These updates are expected to shed light on how consumers are adjusting to the impact of tariffs and the evolving employment landscape.

Additionally, with a recent rate cut now in the rearview mirror, both businesses and investors are paying close attention to upcoming economic data releases. This information will be instrumental as they try to interpret the Federal Reserve’s potential actions at its next meeting. Our focus remains on the specific companies that you own and any impact on their future earnings potential.

Please don’t hesitate to reach out with any questions or to discuss your portfolio in more detail.

- The LVM Team