Consumer sentiment has fallen to one of its lowest points of the current expansion, but the broader economic picture is more balanced than the headlines suggest. Inflation expectations are stabilizing, markets have held up, and long-term trends offer perspective.

Watch this Episode

This discussion is with Vector advisor and COO Jason Ranallo.

Listen to this Episode

Subscribe to Vector’s Well Balanced podcast on Apple Podcasts or Spotify for weekly market updates and real-world financial planning topics. Including this episode.

Contact Us or Schedule an Intro Call

These discussions aim to spark dialogue about enhancing retirement readiness and making more informed financial decisions. If someone you know is seeking clarity on their financial life, please make an introduction to your team at Vector.

A Moment of Low Consumer Confidence — and What’s Behind It

Vector’s Jason Ranallo discusses the latest drop in U.S. consumer sentiment. November’s reading from the University of Michigan fell to 50.3, the second-lowest point since the pandemic recovery. The decline spanned age groups, income levels, and political affiliations — though households with larger stock ownership were noticeably more optimistic after a strong market year.

Uncertainty continues to be the biggest drag. Concerns around the government shutdown and signs of a cooling labor market have made consumers hesitant heading into the holidays. Yet inflation expectations — how we believe future prices will behave — remain fairly steady.

Economic Cycles vs. Market Cycles

Cycles are normal. Historically:

U.S. economic expansions average about four years

Bull markets run for about 70 months, delivering cumulative returns above 220% on average

Recessions last just over a year,

Bear markets decline for roughly 14 months with an average drop of 39%,

(*based on the S&P 500 index over the last ~100 years)

Each downturn feels unique while we’re in it — the 1970s, the dot-com era, the financial crisis, the pandemic — yet markets have recovered every time, often stronger than before.

Where Things Stand Today

Despite low sentiment, several fundamentals remain supportive:

Corporate earnings have generally been solid,
Inflation has moderated,
And the Federal Reserve has begun easing interest rates, gradually.

Periods like this — when confidence is low but fundamentals are stabilizing — have historically preceded some of the strongest one-year market returns.

A Framework for Uncertain Environments

Two core principles that guide Vector’s planning approach:

Diversification across markets, assets, geographies, and time periods
We can’t predict which part of the market will lead in the short term.
A goals-based or “bucket” structure
Short-term spending needs are separated from longer-term growth buckets, helping individuals navigate volatility without disrupting their broader plan.

Take Aways

Low consumer confidence doesn’t always signal weakness in markets. Sometimes, it simply reflects uncertainty during transition — and history shows that patient, long-term investors have often benefited from sticking to the plan.

If you’d like to review how your own financial buckets are positioned for the next few years, feel free to reach out.

And if you found this helpful, share this Well-Balanced episode with anyone who might appreciate the perspective.

Contact Us

Video & Podcast - Chapters

0:10 ... Introduction

0:56 ... Economic Uncertainty

1:52 ... Historical Context

2:39 ... Current Market Position

3:52 ... Investment Strategy

4:43 ... Regulatory

Transcript

(Adapted transcript for readability)

Welcome back to Well-Balanced, where we discuss the markets, the economy, and what it all means for your financial plan. I’m Jason Ranallo from Vector Wealth Management.

What’s Driving Today’s Headlines: Consumer Confidence

The latest report from the University of Michigan showed U.S. consumer sentiment falling to 50.3 in November — one of the lowest readings of this entire economic expansion. It’s actually the second-lowest level since the pandemic recovery, just above the June 2022 trough. The decline was broad, spanning age groups, income levels, and political affiliations.

There was one exception:

Households with larger stock holdings reported better sentiment, thanks in part to a strong year in the markets.

The main sources of uncertainty right now include concerns about a potential government shutdown and signs that the labor market is cooling. When consumers feel uncertain, they tend to spend less, which can slow economic growth — especially heading into the holiday season.

A Closer Look at Inflation Expectations

Despite the drop in confidence, inflation expectations have remained fairly stable. The one-year outlook rose slightly, while the five-year expectation fell to 3.6%.

Inflation expectations matter because they influence behavior — people may ask for higher wages or make purchases sooner if they believe prices will rise rapidly. These behaviors can, in turn, contribute to inflation. So seeing expectations hold steady is a constructive development and gives the Federal Reserve more room to gradually ease interest rates.

The Bigger Picture: Market and Economic Cycles

It’s important to zoom out. Economic cycles and market cycles follow different rhythms:

• Economic expansions in the U.S. have historically lasted about four years.

• Recessions have averaged just over one year.

• Bear markets tend to last around 14 months, with an average decline of 39%.

• Bull markets run much longer — about 70 months on average — and have historically delivered cumulative returns above 220%.

Every downturn feels different in the moment — whether it was the stagflation of the 1970s, the dot-com bust, the global financial crisis, or the pandemic crash. Yet markets have recovered each time and continued to grow over the long run.

Where Things Stand Today

Yes, consumer confidence is low, and people are uneasy about inflation, jobs, and broader government dysfunction. But at the same time, markets have remained resilient. That resilience has been supported by:

• Solid corporate earnings

• Moderating inflation

• Early stages of Federal Reserve interest rate cuts

Historically, some of the strongest 12-month market returns have occurred shortly after consumer sentiment hit a low — not when optimism was at its peak.

How We Approach Uncertainty

At Vector Wealth Management, we rely on time-tested principles rather than short-term predictions:

1. Diversification.

Across asset classes, geographies, investment styles, and — importantly — time periods. We can’t reliably predict which segment will outperform next.

2. A goals-based “bucket” approach.

Short-term spending needs are separated from long-term growth investments. This structure helps weather periods of volatility without disrupting longer-term financial objectives.

The Takeaway

Even when confidence is low and headlines sound discouraging, long-term context can help keep things in perspective. Periods like this often highlight why patience, diversification, and thoughtful planning matter.

If you’re feeling uneasy or want to revisit how your financial buckets are positioned, we’re always here to discuss your plan.

And if this conversation was helpful, please share this episode of Well-Balanced with friends or family who may benefit from the perspective.

Regulatory

Information presented is for educational purposes only and does not intend to make an offer or solicitation for the sale or purchase of any specific securities, investments, or investment strategies.

Information expressed does not take into account your specific situation or objectives, and is not intended as recommendations appropriate for any individual. Listeners are encouraged to seek advice from a qualified tax, legal, or investment adviser to determine whether any information presented may be suitable for their specific situation.

Investments involve risk and unless otherwise stated, are not guaranteed.

V25317290

When Sentiment Drops, Perspective Matters