The Math is Starting to Show … Gas Station Spend Growth is Now About 40% of Total Growth; Mapping Sentiment and Wealth Effect Pressures: Macro Monday

By David Schick and Jonathan Feeney and David Katzman and Jack Hermann Published on March 23, 2026 PDF

Key Takeaways

1 – Consumer spending remains positive but with gas station spending now contributing about 100 bp of the +2.4% y/y, and total pace is still softer than the strong 3Q25 pace. Consumer Discretionary has underperformed the S&P500 by 990 bp YTD in 2026.

2 – Gasoline prices are now up nearly 50% year over year — historically, +30% sustained increases hit other discretionary spending within 6-8 weeks.

3 – Consumer Sentiment is at near-GFC lows but is now lapping weak comparisons. Wealth effect is 600 bp softer than 4Q25.

So far, consumer activity hasn’t changed much in aggregate yet … our overall tracker is fairly stable – but the trend is still softer than 3Q25. Our Consumer Velocity tracker remained positive but muted, running up +2.4% y/y T4W. This metric was running -1.6% y/y in mid-December but was up +3-4% in 3Q25. Gas station spending is running up about 20% y/y and represents approximately 5% of our index (as it does of consumer spending). The trailing Consumer Velo 12-week trend is also up +2.4% y/y (0.5 standard deviations below average) vs. +2.0% y/y the prior week, leading to a flat shorter vs. longer-term inflection (0.1 standard deviations above average). See Fig 1-2.

Housing potential & kinetic energy is significantly softer as mortgage rates / bond markets have been pressured higher by oil inflation. US 30Y FRM rate have moved higher the last 3 weeks, now running down -69 bps y/y on a T4W basis (0.9 standard deviations below average since 2020). MBA’s mortgage applications for purchase continue to run up +11% y/y while refinance applications running up +68% (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 3-6.

Gasoline inflation is now +49.7% y/y for the week ending last Friday following +41.5% the week prior and +30.3% two weeks ago. Gas prices ran up +32.4 % y/y on a T4W basis and +4.3% y/y on a T12W basis, corresponding to +28.1% inflection between shorter- and longer-term trends (1.5 standard deviations above average since 2017, which includes 2021 spikes, and 4.0 standard deviations above average since 2023). It is worth noting US discretionary consumer comp store sales broadly decelerated only after gas y/y prices were +30% in the fall of 2007. Our analysis of, and experience with, prior slowdowns driven by external macro stimuli suggests gas price inflation of 30%+ y/y begins to impact discretionary spending after about 6-8 weeks. 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, Jon Feeney noted last week that the Optimal Cost Factor continues to work lower, down -5.4% y/y. Higher energy & oil prices moving input costs index higher, but still down significantly y/y. See Fig 7-8.

Sentiment is very weak (right at GFC lows!) but is now lapping very weak comparisons. Overall, headline Sentiment is down -2.5% y/y and -13% y/y on a T3M basis (1.1 standard deviations below average) and -18% y/y on a T9M basis (1.8 standard deviations below average). This compares to -13% y/y on a T9M basis last month, marking the third consecutive month where longer-term Sentiment y/y improved from the prior month. Upper-third income Sentiment has declined -11% y/y on a T3M basis (0.8 standard deviations below average), after declining -22% y/y T3M last month. Middle-income Sentiment has declined -12% y/y on a T3M basis (1.0 standard deviations below average) compared to -19% last month, and lower-income Sentiment has declined -15% y/y on a T3M basis (1.3 standard deviations below average) compared to -22% last month. See Fig 9-12.

Consumer Wealth Effect Index is 600 bp below 3Q25 levels – a drag on Premium mindset. Optimal Advisory’s Wealth Effect Index is at 9.0% y/y (0.1 standard deviations below average since the start of 2022). This metric was running +15.4% y/y in October 2025. With home prices flat y/y and equity returns more volatile in recent weeks we note the “flywheel” of wealth effect is more muted. See Fig 13-16.

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 has suggested the S&P 500 to fall to just below 6000 by this month, 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 Relative to Historical Averages

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 intraday 3/23/2026

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