Buying Attitude Slices – Homes as the Lonely Positive Slope; Consumer Velocity Decel Notable (Discount Big Box Timing and Pull Forward Impact Likely): Macro Monday

By David Schick and Jonathan Feeney and David Katzman and Jack Hermann Published on July 19, 2026 PDF

Summary: (1) Our analysis of the latest buying attitudes by category points to consumers at low and worsening purchase plans except for homes, see Charts of the Week; (2) Our analysis shows spending decelerated last week on y/y basis – in our math due to big box discounter tougher comparisons and some likely normalization of gas price spike share shifts, see details below in Fig 1; (3) Home borrowing costs remain elevated, with the 30Y FRM at 6.55% (last below 6% in Fall 2022), see Fig 3-6; (4) Gas prices remain in flux as middle east volatility picks up again, gas inflation re-accelerated with the T4W back to +43% y/y and remains the dominant macro signal, see Fig 7; (5) Sentiment continued higher m/m, now two months off May’s all-time low (44.8), see Fig 9-12; and (6) the Wealth Effect Index decelerated for the fifth straight week, see Fig 13-16.

Charts of the Week – Note Home Buying Attitudes Higher than Mid-2024

A subtle, but important, shift in home buying attitudes stands out and syncs with our broad-based channel checks around consumer activity.

Source: Optimal Advisory Analysis, University of Michigan Survey of Consumers

Our Consumer Velocity tracker decelerated sharply this week as key big box discount trends slowed and pulled our total tracker to −0.2% y/y (from +1.7% the prior week) and the T12W at +1.7% y/y (from +2.3%). The underlying trend has now weakened to 1.5 standard deviations below the post-2022 average on a T4W basis and 0.9 on a T12W basis. The T4W vs. T12W inflection was −1.9 pts, the fourth consecutive week (and 7th of the last 10 weeks) of shorter-term growth lagging longer-term, with the gap widening from −0.6 pts last week. See Fig 1-2.

Housing borrowing costs remain elevated; inventory holding steady. US 30Y FRM rate is up to 6.55%, running down -24 bps y/y on a T4W basis (0.3 standard deviations below average since 2020). MBA’s mortgage applications for purchase index is running down -7% y/y while refinance applications index is flat y/y. Median home prices are slightly up y/y while inventory also remains slightly up y/y. 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 re-accelerated sharply this week, with the weekly print jumping to +58% y/y (accelerating from +36%) and the T4W accelerating to +43% y/y (from +36%), while the T12W decelerated slightly to +51% y/y (from +52%). The T4W trend is 0.8 standard deviations above average, and the T4W vs. T12W inflection narrowed to −8.0 pts (from −16.0) as shorter-term growth moved back toward the longer-term trend. We continue to flag that utilities (electricity and heating fuel) run about 9% of lower-income household spending vs. 4% for higher-income households, compounding the squeeze at the bottom of the income distribution. See Fig 7-8.

Sentiment continued to recover off May’s all-time low (44.8), rising to 54.4 (from 49.5 in June), with headline Sentiment y/y accelerating to -12% y/y this month (from -18%). However, the T3M still decelerated to -15% y/y (1.2 standard deviations below average), while the T9M accelerated slightly to -17% y/y (1.6 standard deviations below average). Upper-third income Sentiment is down -9% y/y on a T3M basis (0.7 standard deviations below average), decelerating from -6% y/y T3M last month. Middle-income Sentiment is down -18% y/y on a T3M basis (1.4 standard deviations below average), decelerating from -17% y/y T3M last month, and lower-income Sentiment is down -20% y/y on a T3M basis (1.7 standard deviations below average), decelerating from -19% last month. We note the increase in sentiment was primarily driven by middle-third income (+26% m/m) and upper-third income (+10% m/m) consumers.

Consumer “Wealth Effect” continued to decelerate this week. Optimal Advisory’s Wealth Effect Index is at +13.5% y/y (decelerating for 5 consecutive weeks from +16.4% y/y peak in mid-June and 0.3 standard deviations above average since the start of 2022). With home prices slightly positive y/y and despite headwinds from lower crypto prices we note the “flywheel” of wealth effect remains elevated off strong equity returns. See Fig 13-16.

Our Multifactor Macro Market Model had 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

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 market close 7/17/2026

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