Consumer Velo Further Decelerated Last Week; Slowdown Broad-based but our Premium Index slower than Value (Low End Theory, cue the mic) … Macro Monday

By David Schick and Jonathan Feeney and David Katzman and Jack Hermann Published on December 8, 2025 PDF

Consumer Velo is still softening … the run rate is now 80 bp slower than just one week prior and has turned negative y/y. Shorter-term spending trend further decelerated last week. Our metric is now running down -0.5% y/y (1.7 standard deviations below average since the start of 2022). We hear (and have) all the debates about “strong Black Friday”. But our wider lens (analyzing 133 companies) shows holistic slowdown. The longer-term trend is running up +0.6% y/y, leading to a shorter vs. longer-term inflection of -1.1% (0.5 standard deviations below average), the 15^th straight week of shorter-term trends running below longer-term trends. See Fig 1-2.

Premium is softer than Value, by our measure. We use a combination of consumer spending and psychographic monitoring. Optimal’s premium monitor is running down -2.3% y/y on a T4W basis and flat y/y on a T12W basis, running 270 bp (0.8 standard deviations below average) and 200 bp (also 0.8 standard deviations below average) respectively below our Value Monitor, which is running up +0.4% y/y on a T4W basis and +2.0% y/y on a T12W basis. See Fig 3-6.

Housing Kinetic Energy remains robust as mortgage rates move lower and home price growth remains positive. US 30Y FRM rate continuing to move lower, now running down -56bps y/y on a T4W basis. MBA’s mortgage applications for purchase are currently running +15% y/y after running up +30% y/y 3 weeks ago. Inventory available for sale continues to run up +13.9% y/y but has decelerated from +30% y/y in May of this year. We continue to expect price will be the way to solve for volume. Median home prices are running up +1.1% y/y (1.1 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 are back to running flat on a y/y basis. Gas prices ran flat on a T4W basis, following a brief period of slightly higher y/y prices after 41 consecutive weeks of y/y declines through early November. Prices declined -1.0% y/y on a T12W y/y basis, corresponding to a +1.6% inflection between shorter and longer-term trends (0.1 standard deviations above historical trends), the 17^th straight week of positive inflections. See Fig 11-12.

Consumer Sentiment y/y continues to decline on a shorter-term basis but has stabilized on a longer-term basis. Headline Sentiment has declined -27% y/y on a T3M basis (2.2 standard deviations below average) and -19% 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 -31% y/y on a T3M basis (2.3 standard deviations below average), middle-income Sentiment has declined -26% y/y on a T3M basis (2.0 standard deviations below average), and lower-income Sentiment has declined -26% y/y on a T3M basis (2.2 standard deviations below average). See Fig 13-16.

Consumer Wealth Effect Index moving lower but remains above the mean. Optimal Advisory’s Wealth Effect Index is currently at 12.4% y/y (0.2 standard deviations above its mean value since the start of 2022) after peaking at 15.4% in late September. Home price growth a positive influence on the index, volatility in equity markets and crypto serving as headwinds. See Fig 17-20.

Multifactor Macro Market Model suggests downturn, 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. See Fig 21-23.

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 24 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 21-23: Optimal Advisory Multifactor Macro Market Model

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

Sources: 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)

Sources: 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 with Confidence Intervals

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

Figure 24: Index & Sector Performance

Source: Optimal Advisory Analysis, Bloomberg, prices intraday 12/8/2025

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