Macro Monday: Consumer Deceleration Continued Last Week / Luxury Slowdown Sharpest but Art Robust / Sub-components of Historic Sentiment Decline

By David Schick and Jonathan Feeney and David Katzman and Jack Hermann Published on November 24, 2025 PDF

Consumer Velo slowed further last week. Shorter-term spending growth decelerated further last week, now running up +0.4% y/y (now 1.4 standard deviations below average since the start of 2022). Longer-term spending growth is running up +1.5% y/y, leading to a shorter vs. longer-term differential of -1.0% (0.5 standard deviations below average). We note this is the 13^th straight week of shorter-term trends running below longer-term trends. See Fig 2-3.

Luxury was softer again last week … our Premium vs Value Monitor continues to show a trend towards Value. We use a combination of consumer spending and psychographic monitoring to monitor Premium and Value traction within consumer activity. Optimal’s Premium Monitor is running down -1.2% y/y on a T4W basis and up +0.2% y/y on a T12W basis, running 380 bp (1.4 standard deviations below average) and 280 bp (1.0 standard deviations below average) respectively below our Value Monitor, which is running up +2.6% y/y on a T4W basis and +3.0% y/y on a T12W basis. This syncs with some of our general economic checks on discretionary lease appetites softening. See Fig 4-7.

Major November art auctions gave a glimpse of a healthy extreme high-end last week. High-profile collections (Klimt, see Fig 1) from high-profile collectors (Lauder, Pritzker) drove $2.2 billion in auction sales versus $1.7 billion estimate. Notably, the depth of bidding broadened to 4-5 participants, breaking a trend of the last 9-12 months with many lots with single bidders. We believe the auction houses did a good job driving discipline of sellers – allowing robust buyer engagement. Buyers from the US and the Middle East were active. Headlines were made with the $236 mm Klimt (with fees), but we note energy in the $2-10 mm price strata as well.

Housing kinetic energy remains net positive as mortgage activity is higher and rates move lower. US 30Y FRM rate is running down -50bps y/y on a T4W basis. MBA’s mortgage applications for purchase is currently running +24% y/y. Inventory available for sale continues to run up +13.9% y/y but has decelerated from +30% y/y in May of this year. Median home prices are running up +1.1% y/y (1.2 standard deviations below average since 2020). Roughly 18% of Americans sell, build, fix, lend to, and furnish homes – velocity matters for the economy. We do also note October foreclosure activity +19% y/y (source: ATTOM) with the highest rates in FL, SC, IL, DE, and NV. See Fig 8-11.

Gas Prices are now running flat y/y on a shorter-term basis, we note erasure of a consumer tailwind for much of 2024-25. Gas prices are flat y/y on a T4W basis and declined -1.3% y/y on a T12W y/y basis, corresponding to a +1.3% inflection between shorter and longer-term trends (0.2 standard deviations above historical trends), the 15^th straight week of positive inflections. See Fig 12-13.

Consumer Sentiment is significantly lower y/y across incomes – just the 4^th time this magnitude of y/y pullback has occurred since 1980 and top 1/3 incomes are the sharpest decline. Sentiment has declined -25% y/y on a T3M basis (2.0 standard deviations below average) and -22% y/y on a T9M basis (2.1 standard deviations below average). Upper-income Sentiment has declined -28% y/y on a T3M basis (2.1 standard deviations below average), middle-income Sentiment has declined -24% y/y on a T3M basis (1.8 standard deviations below average), and lower-income Sentiment has declined -25% y/y on a T3M basis (2.2 standard deviations below average). See Fig 14-17.

Our consumer Wealth Effect Index trend remains above mean on y/y basis, but the rate-of-change is now measurably slowing. Our Wealth Effect Index is currently at 14.0% y/y (0.3 standard deviations above its mean value since the start of 2022) after peaking at 15.4% in late September. See Fig 18-21.

Our Multifactor Macro Market Model suggests downturn potential. Optimal’s Multifactor Macor Market Model projects the S&P 500 as well as bull and bear cases based on lagged data for 12 macroeconomic factors. The model factors suggest softer performance 4Q25 into 1Q26 and stronger performance 2Q26. See Fig 22-24.

In this weekly note, we focus on key changes in the US consumer’s real-time dynamics. We also highlight “non-normal” current dynamics, relative to historic patterns. See Fig 25 for sector market performance.

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Figure 1: Auction Week Highlight – Klimt

Source: Gustav Klimt, Portrait of Elisabeth Lederer, 1914–16, Image courtesy of Sotheby’s

Figures 2-3: 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 4-7: 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 8-11: 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 12-13: 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 14-17: 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 18-21: Wealth Effect Index & Components

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 22-24: 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 25: Weekly Index & Sector Performance

Source: Optimal Advisory Analysis, Bloomberg, prices intraday 11/24/2025

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