The 2025 consumer sentiment rollercoaster

What It Covers

Consumer sentiment hits near-2022 lows despite economic data showing mixed signals, while Fed officials debate future rate cuts amid competing inflation and labor market concerns.

Key Questions Answered

• •Fed Policy Split: Two distinct camps emerge - inflation hawks wanting caution on cuts versus labor market doves concerned about weakening employment, with January pause likely.
• •Hiring Recession: Nine major industries now show negative job growth including manufacturing, financial services, and professional services, signaling broader economic weakness beyond cyclical downturns.
• •Consumer Spending Shift: Middle-class shoppers concentrate spending at wholesale clubs like Costco and discount retailers, cutting back on dining and travel while sentiment approaches 2022 lows.
• •Data Reliability Crisis: Government shutdown creates permanent gaps in economic data, with missing October 2025 CPI creating long-term challenges for year-over-year comparisons and Fed decision-making.