K-Shaped Clarity = Art Strength into May Impressionist / Modern / Contemporary Sales (Klimt into Rothko) but Spending Slows Further Last Week; Sentiment Remains at Record Lows: Macro Monday

By David Schick and Jonathan Feeney and David Katzman and Jack Hermann Published on May 11, 2026 PDF

Summary: (1) Our +65% y/y estimate for the upcoming May Major NYC Impressionist, Modern, and Contemporary auctions suggesting robust extreme high end activity, see Chart of the Week … we call out high quality supply and robust pre-auction activity from our channel checks; (2) But broader consumer spending slowed further last week and the math means non-gas spending is likely trending negative, see Fig 1; (3) Mortgage rates noved higher, still stalling the housing market with limited signs of thaw, see Fig 3-6; (4) Gasoline prices are extremely elevated, now +67% y/y; sustained higher prices are impacting consumer purchasing behaviors, see Fig 7; (5) Lower- and middle-income Sentiment continues to move lower, while higher-income Sentiment is more insulated as equity markets continue to shrug off geopolitical concerns, see Fig 16.

Our anlysis of art market trends suggest the very high end of the K-shaped economy is still quite strong. Aggregate volume moved from May 2025 contraction to a potentially very strong 2026. We estimate the major houses brought in in $1.27 billion in May 2025, down 17% from May 2024. We estimate May 2026 auctions are estimated to bring in $2.4 billion cumulatively, with the midpoint roughly 65% above May 2025’s result. Our market checks suggest strength reflects the market buoyancy started by the Klimt $236M record last November and picked up by the important Rothkos coming in May.

Chart of the Week

Sources: Optimal Advisory analysis, Artnet, Ocula , Art Newspaper, HENI. Evening + Day sales: Christie’s, Sotheby’s, Phillips, Bonhams.

Our Consumer Velocity tracker remained positive but continued to decelerate, up +0.4% y/y T4W following +0.9% y/y last week. This metric was running up +3-4% in 3Q25. With gasoline station spending running up about 18% y/y and gallon prices +67% y/y we note (a) unit demand is suffering which indicates trip consolidation and (b) non-gasoline spending was likely down y/y last week. The trailing Consumer Velocity 12-week trend is up +2.1% y/y (0.7 standard deviations below average) vs. +2.2% y/y the prior week. See Fig 1-2.

Mortgage rates have moved higher the last 2 weeks. Housing activity remains virtually frozen but some positive inflection in precursor metrics. US 30Y FRM rate up to 6.37% running down -49 bps y/y on a T4W basis (0.7 standard deviations below average since 2020). MBA’s mortgage applications for purchase running up 5% y/y while refinance applications running up 29%. Median home prices are flat y/y (1.4 standard deviations below average since 2020). Roughly 18% of US GDP is related to the selling, building, fixing, lending to, and furnishing of homes – velocity matters for the economy. See Fig 3-6.

Gasoline inflation is now +67% y/y for the week ending last Friday, compared to +78% the week prior and +63% two weeks ago. On March 7th we had noted that history suggest 6-8 weeks of sustained pressure to change behavior – we are now here. We also note utilities (electricity and heating fuel) run from about 9% of lower-income household spending to 4% for higher-income households. See Fig 7-8.

Sentiment is at all-time lows (currently at 48.2) for the second consecutive month, down -8% y/y this month despite lapping exceedingly weak comparisons. Overall, headline Sentiment is down -8% y/y this month alone and down -6% on a T3M basis (0.5 standard deviations below average) and -18% y/y on a T9M basis (1.7 standard deviations below average). Upper-third income Sentiment is up +1% y/y on a T3M basis (approximately average), after declining -4% y/y T3M last month. Middle-income Sentiment has declined -8% y/y on a T3M basis (0.6 standard deviations below average) each of the last two months, and lower-income Sentiment has declined -12% y/y on a T3M basis (1.0 standard deviations below average) compared to -13% last month. See Fig 9-12.

Consumer “Wealth Effect” continued momentum carried by equity returns. Optimal Advisory’s Wealth Effect Index is at +14% y/y (0.2 standard deviations above average since the start of 2022 and higher for 6 consecutive weeks). Equity returns have been strong, shrugging off conflict in the Middle East and higher energy prices, while beginning to lap a softer market from April 2025. With home prices flat y/y we note the “flywheel” of wealth effect turning higher. See Fig 13-16.

Our Multifactor Macro Market Model has been suggestive of March 2026 softness, rebound. Optimal’s Multifactor Macro Market Model projects the S&P 500 as well as bull and bear cases based on lagged data for 12 macroeconomic factors. The model suggested the S&P 500 to fall to just below 6000 by March, before rebounding back up to 6400 by May. We use this model as a guide to how macro would guide the market, given our analysis of current variables. This is, of course, outside of other factors at work. See Fig 17-18.

Figures 1-2: Optimal Advisory Consumer Velocity Monitor

Source: Optimal Advisory Analysis, Bloomberg Second Measure

Consumer Spending y/y Relative to Historical Average

Source: Optimal Advisory Analysis, Bloomberg Second Measure

Figures 3-6: Housing Kinetic Energy

Source: Optimal Advisory Analysis, Freddie Mac, Zillow, Redfin

Mortgage Rates, For Sale Inventory, & Median List Price y/y Relative to Historical Averages (Since 2020)

Source: Optimal Advisory Analysis, Freddie Mac, Zillow, Redfin

Figures 7-8: Gas Prices y/y

Source: Optimal Advisory Analysis, Bloomberg

Gas Prices y/y Relative to Historical Averages (Since 1992)

Source: Optimal Advisory Analysis, Bloomberg

Figures 9-12: Consumer Sentiment T3M and T9M y/y

Sentiment y/y by Income Tercile Relative to Historical Averages

Comparison of Sentiment y/y Across Income Terciles

Source: Optimal Advisory Analysis, University of Michigan Consumer Survey

Figures 13-16: Consumer Wealth Effect & Components y/y

Source: Optimal Advisory Analysis, Bloomberg, Zillow, Redfin

Median Home Price y/y, S&P 500 y/y, & Wealth Effect Index (Since 2022)

Source: Optimal Advisory Analysis, Bloomberg, Zillow, Redfin

Figures 17-18: Optimal Advisory Multifactor Macro Market Model

Historical Test Predictions vs. Actual (On Test Data Only)

Source: Optimal Advisory Proprietary Analysis, Bloomberg, FRED, BLS, BEA, OECD, University of Michigan Consumer Sentiment Survey, U.S. Census Bureau, FRB

Actual & Projected S&P 500 (Including Training & Test Data) with Confidence Intervals

Source: Optimal Advisory Proprietary Analysis, Bloomberg, FRED, BLS, BEA, OECD, University of Michigan Consumer Sentiment Survey, U.S. Census Bureau, FRB

Figure 19: Index & Sector Performance

Source: Optimal Advisory Analysis, Bloomberg, prices at intraday 5/11/2026

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