Income’s 9 or 13 Year Event; Wealth Effect Ends 11 Week Streak; Consumer Velo Soft and with Decel: Macro Monday (on Sunday)

By David Schick and Jonathan Feeney and David Katzman and Jack Hermann Published on June 28, 2026 PDF

Summary: (1) RDI has spent the last three months at a pace rarely seen, we examine that and precedents in Chart of the Week; (2) Our math shows Consumer Velocity decelerated further last week, see Fig 1; (3) Housing inventory continues to approach flat y/y after spending the last two years up meaningfully y/y, see Fig 3-6; (4) Gas prices have significantly retreated from highs, but sticky gas inflation remains the dominant macro signal at +38% y/y T4W, see Fig 7; (5) Sentiment moved higher m/m after hitting all-time lows last month but very different inflections by income strata, see Fig 9-12; and (6) Wealth Effect Index had a subtle but notable shift, breaking an 11 week streak, see Fig 13-16.

Chart of the Week: RDI in Rare Negative Territory, t3m y/y
RDI has only run this soft y/y 7 times since 1960 (or 5 times if Covid whipsaws and comparisons are removed). Current softness is indeed notable.

Source: Optimal Advisory Analysis, FRED

Our Consumer Velocity tracker decelerated further this week, with the T4W at +1.4% y/y vs. +1.9% the prior week, while the T12W trend also decelerated slightly to +2.1% y/y (from +2.3%). The underlying trend remains soft (0.8 standard deviations below the post-2022 average on a T4W basis and 0.6 on a T12W basis). The T4W vs. T12W inflection was −0.8 pts, the third consecutive week (and 9th in the last 10 weeks) of shorter-term growth lagging longer-term, with the gap widening from −0.4 pts last week. See Fig 1-2.

Housing borrowing costs remain elevated, prices flat as supply continues to decelerate. US 30Y FRM rate is up to 6.49%, running down -33 bps y/y on a T4W basis (0.5 standard deviations below average since 2020). US for-sale inventory up only 1.3% and has linearly decelerated from +28% from the same time last year. MBA’s mortgage applications for purchase index is running up +3% y/y while refinance applications index is running up +14% y/y. Median home prices are flat 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 was mixed this week: the latest weekly print re-accelerated to +42% y/y (from +29%), while the smoothed trends continued to decelerate, with the T4W now at +38% y/y and the T12W at +54% y/y. The T4W trend is 0.6 standard deviations above average, and the T4W vs. T12W inflection has deepened to −15.5 pts (from −14.3), with shorter-term growth now running well below 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 increased off last month’s all-time low (44.8) to 49.5, but it remains the second-lowest reading on record, with headline Sentiment y/y decelerating to -18% this month (from -14%). Overall, headline Sentiment is down -18% y/y this month and -13% on a T3M basis (1.0 standard deviations below average) and -19% y/y on a T9M basis (1.8 standard deviations below average). Upper-third income Sentiment is down -6% y/y on a T3M basis (0.5 standard deviations below average), decelerating from -1% y/y T3M last month. Middle-income Sentiment is down -17% y/y on a T3M basis (1.3 standard deviations below average), decelerating from -11% y/y T3M last month, and lower-income Sentiment is -19% y/y on a T3M basis (1.6 standard deviations below average), decelerating from -15% last month, although lower-income Sentiment is up +26% m/m. See Fig 9-12.

Consumer “Wealth Effect” decelerated again this week. Optimal Advisory’s Wealth Effect Index is at +15.7% y/y (decelerating from +16.1% y/y last week and 0.5 standard deviations above average since the start of 2022 after running higher w/w for 12 consecutive weeks). With home prices negative 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 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

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 6/26/2026

DISCLOSURES AND DISCLAIMERS

Analyst Certification

The analyst primarily responsible for the preparation of this report attests to the following: (1) that the views and opinions rendered in this report reflect his or her personal views about the subject companies or issuers; and (2) that no part of the analyst’s compensation was, is, or will be directly related to the specific recommendations or views in this report.

Analyst Certifications And Independence

Each of the Optimal Advisory analysts whose names appear on the front page of this report hereby certify that all the views expressed in this Report accurately reflect our personal views about any and all of the subject securities or issuers and that no part of our compensation was, is, or will be, directly or indirectly, related to the specific recommendations or views of in this Report.

Optimal Advisory (the “Company”) is an independent equity advisory provider. The Company is not a member of the FINRA or the SIPC and is not a registered broker dealer or investment adviser. Optimal Advisory has no other regulated or unregulated business activities which conflict with its provision of independent advisory work.

Limitations Of Research And Information

This Report has been prepared for distribution to only qualified institutional or professional clients of Optimal Advisory. The contents of this Report represent the views, opinions, and analyses of its authors. The information contained herein does not constitute financial, legal, tax or any other advice. All third-party data presented herein were obtained from publicly available sources which are believed to be reliable; however, the Company makes no warranty, express or implied, concerning the accuracy or completeness of such information. In no event shall the Company be responsible or liable for the correctness of, or update to, any such material or for any damage or lost opportunities resulting from use of this data.

Nothing contained in this Report or any distribution by the Company should be construed as any offer to sell, or any solicitation of an offer to buy, any security or investment. Any research or other material received should not be construed as individualized investment advice. Investment decisions should be made as part of an overall portfolio strategy and you should consult with a professional financial advisor, legal and tax advisor prior to making any investment decision. Optimal Advisory shall not be liable for any direct or indirect, incidental or consequential loss or damage (including loss of profits, revenue or goodwill) arising from any investment decisions based on information or research obtained from Optimal Advisory.

Optimal Advisory may receive consulting or other compensation from securities mentioned but is not related to any recommendation in this report.

Reproduction And Distribution Strictly Prohibited

No user of this Report may reproduce, modify, copy, distribute, sell, resell, transmit, transfer, license, assign or publish the Report itself or any information contained therein. Notwithstanding the foregoing, clients with access to working models are permitted to alter or modify the information contained therein, provided that it is solely for such client’s own use. This Report is not intended to be available or distributed for any purpose that would be deemed unlawful or otherwise prohibited by any local, state, national or international laws or regulations or would otherwise subject the Company to registration or regulation of any kind within such jurisdiction.

Copyrights, Trademarks, Intellectual Property

Optimal Advisory, and any logos or marks included in this Report are proprietary materials. The use of such terms and logos and marks without the express written consent of Optimal Advisory is strictly prohibited. The copyright in the pages or in the screens of the Report, and in the information and material therein, is proprietary material owned by Optimal Advisory unless otherwise indicated. The unauthorized use of any material on this Report may violate numerous statutes, regulations and laws, including, but not limited to, copyright, trademark, trade secret or patent laws.

Additional Information is available upon request.

For more information on receiving Optimal Advisory, email: [email protected]