Consumer Velo Improves Again but Below 3Q25; Premium Index Inflecting; Store Pics of NA Beer Promos & Stio Brand Store; Pop in Mortgage Activity; Gas Prices Drop Further: Macro Monday (on Tuesday for Holiday)

By David Schick and Jonathan Feeney and David Katzman and Jack Hermann Published on January 20, 2026 PDF

Consumer Velo continues improvement, up +2.5% after months of decel. For reference, this metric was running -1.6% y/y three weeks ago 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 +2.5% y/y (0.5 standard deviations below average since the start of 2022), the strongest value since late September. The trailing Consumer Velo 12-week trend is up +0.3% y/y (1.7 standard deviations below average), leading to a shorter vs. longer-term inflection of +2.2% (1.4 standard deviations above average), the largest inflection between shorter and longer-term trends since January 2025. See Fig 1-2.

Our Premium Index is tracking softer than the Value Index on a longer-term trend, but we note Premium rate-of-change is better 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 -0.3% y/y on a T4W basis and down -1.6% y/y on a T12W basis, running 370 bp (0.8 standard deviations below average) and 440 bp (1.0 standard deviations below average) respectively below our Value Monitor, which is running up +3.3% y/y on a T4W basis and up +2.8% y/y on a T12W basis. See Fig 3-6.

Figure A: We Note Prominent NA Promotional Endcap at Whole Foods

Source: Optimal Advisory

Figures B-C: Stio Brand Store a Standout in Recent Visits – Size, Assortment, Service, Vibe

Source for B-C above: Optimal Advisory

Consumer housing “kinetic energy” continues 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 and we note increasing investor conversations around this theme (which we expect to continue). For sale inventory is running up +9.3% y/y (0.4 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 -68bps y/y on a T4W basis. MBA’s mortgage applications for purchase continue to run up +14% y/y while refinance applications running up +128% (a low base, but a necessary step to create eventual velocity). Median home prices are flat y/y (-1.3 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 continue sharper declines – we have more and more conversations about energy costs impacting the consumer / economy. Gas prices ran down -7.4% y/y on a T4W basis, the largest decline since late August, and are down -3.1% y/y on a T12W y/y basis, corresponding to a -4.3% inflection between shorter and longer-term trends (0.7 standard deviations below average). We have had lots of recent conversations on oil and fuel prices 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 continues to work lower, -10.9% y/y. Broad-based commodity price declines have pushed many measured ticker & sector cost indices lower. See Fig 11-12.

Consumer Sentiment remains at historically weak levels, although the y/y trend has bottomed out. Headline Sentiment has declined -27% y/y on a T3M basis (2.2 standard deviations below average) and -21% y/y on a T9M basis (2.0 standard deviations below average) compared to -22% y/y on a T9M basis last month, marking the second month since late 2024 and third month since early 2024 where longer-term Sentiment y/y did not decrease from the prior month. Upper-third income Sentiment has continued to trend downward, declining -32% y/y on a T3M basis (2.3 standard deviations below average), after declining -30% y/y T3M last month. However, middle-income Sentiment has declined -26% y/y on a T3M basis (2.1 standard deviations below average) compared to -27% last month, and lower-income Sentiment has declined -26% y/y on a T3M basis (2.2 standard deviations below average) each of the past two months. See Fig 13-16.

Consumer Wealth Effect Index continued to move lower, now at a below-average level. Optimal Advisory’s Wealth Effect Index is currently at 9.7% y/y (0.6 standard deviations below average since the start of 2022). With home prices flat y/y and equity/crypto returns cooling off, we are seeing early deceleration over recent weeks. 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.

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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 1/20/2026

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