Consumer Velo Better Last Week (We Note Some Help from Easy Comps); Home Refi Spike (Can Help Home Related Retail Late 2026); Gas Price Declines Intensify (How to Think About Energy Prices Across Consumer): Macro Monday 2026 Kickoff

By David Schick and Jonathan Feeney and David Katzman and Jack Hermann Published on January 5, 2026 PDF

Consumer Velo rebounds to +0.8% y/y, though we note primarily due to weaker year-end 2024 spending. For reference, this metric was running -1.7% y/y last week and +3-4% in 3Q25. Our analysis of the trailing 4-week moving average of sales at 133 retailers and consumer concepts is running up +0.8% y/y (1.1 standard deviations below average since the start of 2022), the largest value since the week ending November 9th. Nominally, however, consumer velo was still at its lowest value since the week ending November 2nd; this high y/y increase is primarily due to low consumer spend during the last week of 2024. The trailing Consumer Velo 12-week trend is up +0.5% y/y (1.6 standard deviations below average), leading to a shorter vs. longer-term inflection of +0.3% (0.3 standard deviations above average), the first week of shorter-term trends running above longer-term trends since mid-August. See Fig 1-2.

Our Premium Index is tracking softer than the Value Index on a longer-term trend, but weak higher-end trends are showing signs of bottoming in our more recent analysis. We use a combination of consumer spending and psychographic monitoring to track “trade up” and “trade down” trends. Optimal’s premium monitor is running down -4.2% y/y on a T4W basis and down -1.7% y/y on a T12W basis, running 710 bp (1.5 standard deviations below average) and 460 bp (1.2 standard deviations below average) respectively below our Value Monitor, which is running up 2.8% y/y on a T4W basis and up 2.9% y/y on a T12W basis. See Fig 3-6.

Consumer housing “kinetic energy” is heating up; pickup in refinance applications as mortgage rates move to the lowest level since late 2024 – these precursors can impact demand for home categories in 2H26. For sale inventory running up +11.7% y/y (0.5 standard deviations above average) but at the lowest y/y level since early 2024. US 30Y FRM rate continues to run down, now running down -52bps y/y on a T4W basis. MBA’s mortgage applications for purchase continue to run up +17% y/y while refinance applications running up +88%! Median home prices are running up +1.0% y/y (0.8 standard deviations below average since 2020). Roughly 18% of Americans sell, build, fix, lend to, and furnish homes – velocity matters for the economy. See Fig 7-10.

Gasoline prices with sharper declines again last week – we had renewed weekend conversations on our framework for thinking about energy costs impacting the consumer / economy. Gas prices ran down -4.7% y/y on a T4W basis, the largest decline since summer 2025, and are down -2.3% y/y on a T12W y/y basis, corresponding to a -2.4% inflection between shorter and longer-term trends (0.4 standard deviations below average). We had lots of conversations on oil and fuel prices over the weekend due to developments in Venezuela. Markets are mixed on that thus far. Generally, lower-income consumers spend about 5% of their total spend on fuel, and higher-income consumers spend about 2.5% – so a 10% move in gas prices drives 25-50 bp headwind or tailwind. Utilities (electricity and heating fuel) run from about 9% of lower-income household spending to 4% for higher-income households. Duration of change matters – eventually causing Consumer Sentiment shifts, which then drive more or less discretionary spending. On the cost side, Feeney noted last week that the Optimal Cost Factor ended the year down -7.5%, including key components of the energy complex (crude oil -22.7% y/y). Broad-based commodity price declines have pushed many measured ticker & sector cost indices to 12-month lows. 6 of 15 Food Sector companies ended the year at their lowest cost factor exposure levels in the past 12 months, along with 5 of 6 restaurant subsectors. One notable exception is Fast Food Burger Restaurants, as cattle remains up +20.0% y/y. This week and last week’s inflections are more negative than any week since May. See Fig 11-12.

Consumer Sentiment is at historically weak levels, and the y/y trend is nearing 2025 lows on a shorter-term basis. Headline Sentiment has declined -27% y/y on a T3M basis (2.2 standard deviations below average) and -22% y/y on a T9M basis (2.1 standard deviations below average), marking the first month since late 2024 and second month since early 2024 where longer-term Sentiment y/y did not decrease from the prior month. Upper-third income Sentiment has declined -30% y/y on a T3M basis (2.2 standard deviations below average), middle-income Sentiment has declined -27% y/y on a T3M basis (2.1 standard deviations below average), and lower-income Sentiment has declined -26% y/y on a T3M basis (2.3 standard deviations below average). See Fig 13-16.

Consumer Wealth Effect Index continued to move lower, now at an average level. Optimal Advisory’s Wealth Effect Index is currently at 10.3% y/y (approximately average relative to its mean value since the start of 2022). Lower equity and crypto returns are pulling down the index, while home prices have remained stable. See Fig 17-20.

Multifactor Macro Market Model suggestive of 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 suggests the S&P 500 to fall to just below 6000 by next 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 21-22.

In this weekly note, we focus on key changes in the US consumer’s real-time dynamics (70% of the US economy). We also calculate and present the extent to which current dynamics are “non-normal”, relative to historic patterns. See Fig 23 for sector market performance.

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: Optimal Advisory Premium vs Value Monitor

Source: Optimal Advisory Analysis, Bloomberg Second Measure, Google Trends

Optimal Advisory Premium vs Value Indices Relative to Historical Averages

Source: Optimal Advisory Analysis, Bloomberg Second Measure, Google Trends

Figures 7-10: 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 11-12: Gas Prices y/y

Source: Optimal Advisory Analysis, U.S. Energy Information Administration

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

Source: Optimal Advisory Analysis, U.S. Energy Information Administration

Figures 13-16: Consumer Sentiment T3M and T9M y/y

Source: Optimal Advisory Analysis, University of Michigan Consumer Survey

Sentiment y/y by Income Tercile Relative to Historical Averages

Source: Optimal Advisory Analysis, University of Michigan Consumer Survey

Comparison of Sentiment y/y Across Income Terciles

Source: Optimal Advisory Analysis, University of Michigan Consumer Survey

Figures 17-20: 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 21-22: 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 23: Index & Sector Performance

Source: Optimal Advisory Analysis, Bloomberg, prices intraday 1/5/2026

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