Why Are Consumers Depressed?

The S&P 500 is up 1057% since January 2019.

However, without Alphabet, Amazon, Apple, Meta Platforms, Microsoft, NVidia, and Tesla, an S&P 493 looks very different:

A Snapshot of the Economy

Yes…

• The Inflation rate fell from close to 9% to below 3%.
• Unemployment has been close to all time lows.
• And average wage growth kept up with inflation.

With the unemployment rate low and inflation rate down, the Misery Index looks pretty good as do the Dow, the S&P, and consumer purchasing power.

And yet, pushed down by the expectations component, the Consumer Optimism Index dipped to recession lows at 69.5.

Why? Like the S&P 493, what is the reality that the numbers ignore?

Our Bottom Line: Affordability

Economist Ed Yardeni has some answers when he reminds us that we still remember pre-pandemic lower prices. While the inflation rate goes down, prices do not–they just rise at a slower rate.

In addition, whereas wages on average have kept up with inflation, many, below the average, have not. As for who is more affluent, it tends to be older Baby Boomer households.

Furthermore, the following 13 of the 15 essentials in the PCE (the U.S. Bureau of Economic Analysis’s Personal Consumption Expenditures Price Index) rose more than the PCE’s 22.1% pop from March 2020 to August 2025:

• Major household appliance repairs
• Household maintenance
• Motor vehicle maintenance and repair
• Veterinary & pet services
• Gasoline & other motor fuels
• ‘Food services
• Housing & utilities services
• Home insurance
• Tenant rent
• New motor vehicles insurance
• Food & Beverage
• Childcare
• Live entertainment

And finally, including a 32.1% rise in the price of gasoline, 9 of those 15 essentials rose faster than the average workers’ wage with price increases for home, auto, and life insurance especially hard to ignore.

Consequently, we have a perfect conclusion from the surrealist artist René Magritte who said all is not what it seems to be:

My sources and more: After reading about the S&P 493, I searched for more. Thanks to the (gated) “Morning Briefing” for Ed Yardeni’s insight on the numbers.