The stock market is hitting records. Corporate earnings are strong. And yet, if you ask Americans how they feel about the economy, the answer is: not great. Consumer confidence fell in May 2026, with only 18.5% of Americans saying business conditions are ‘good’ — down from 22.3% in April. The share saying jobs are ‘plentiful’ dropped from 26.9% to 25.5%.
The divergence between market performance and consumer sentiment has been one of the defining economic puzzles of the 2020s. The National Foundation for Credit Counseling forecasts financial stress scores to hit 6.7 out of 10 in Q2 2026. Two-thirds of consumers have cut back on spending due to rising prices. Thirty-one percent cite the high cost of living as the most important financial problem facing their family.
The stock market is owned by roughly 60% of Americans — but very unevenly. The wealthiest 10% own approximately 89% of all stocks. When the S&P 500 hits a record, the top decile gets a meaningful boost. The bottom 60% feel it more distantly. Meanwhile, inflation affects everyone directly, every time they buy groceries, gas, or pay rent.
Despite lower confidence, spending hasn’t collapsed — yet. Major retailers reported cautious but still-active consumers in Q1, partly helped by larger-than-expected tax refunds under the OBBBA. But economists see that as a one-time tailwind. Once refund season ends, spending is expected to pull back as underlying financial stress reasserts itself.
One factor preventing a full confidence crash: the labor market is still functional. But quality matters. More Americans are working multiple jobs to cover costs. If you’re in healthcare, tech, or skilled trades, the job market looks fine. If you’re in retail, hospitality, or lower-wage services, it’s more precarious.
Not necessarily, but it correlates with reduced spending, which can become self-fulfilling. A single month’s dip isn’t alarming; a multi-month deteriorating trend alongside rising financial stress is more concerning.
Because most of the market’s gains accrue to a small percentage of the population. Inflation, housing costs, and energy prices affect everyone daily — and for most Americans, those factors outweigh abstract portfolio performance.
The National Foundation for Credit Counseling measures a Consumer Financial Stress Index on a 10-point scale. A reading of 6.7 indicates elevated, widespread financial anxiety — not quite crisis level, but firmly in distressed territory.