Introduction
Despite positive economic forecasts, consumer sentiment has fallen to its lowest level since 2014, according to a survey by The Conference Board. This growing disconnect between consumer confidence and macroeconomic performance has raised concerns among economists and policymakers.
Why the Economy is Growing But Doesn’t Feel Like It
The economy is on track to grow at a blistering 5.4% annualized rate in the fourth quarter, the fastest since the rebound from the pandemic recession. However, consumer sentiment has become increasingly divorced from the macroeconomy since the pandemic, with many individuals expressing pessimism about their personal finances and the overall economy.
The Impact of the Mar-a-Lago Accord
The Mar-a-Lago Accord, a set of economic proposals articulated by Trump ally Stephen Miran, has become a reality in 2025, with several policies being implemented at a significant cost. The accord’s economic ripple effect is expected to widen in 2026, with potential implications for the global economy.
Global Economic Trends
The U.S. dollar index has fallen to its lowest level since 2021, while the yield on the 10-year Treasury has ticked higher to nearly 4.24%. West Texas Intermediate crude futures have risen by 2.7% to around $62.25 a barrel. Meanwhile, global stocks have risen for a fifth straight session, reaching an intraday record.
China’s Currency Faces Appreciation Pressure
China’s currency is facing substantial appreciation pressure, with media reports suggesting that another intervention round may be forthcoming. The New York Fed has reportedly reached out to currency trading desks on instructions from Treasury to check the dollar-yen exchange rate, potentially signaling joint intervention.
Expert Insights
Rebecca Patterson, a senior fellow at the Council on Foreign Relations, notes that the so-called Mar-a-Lago Accord is becoming a reality. Brad W. Setser, a researcher at the Council on Foreign Relations, warns that China’s currency is facing substantial appreciation pressure. Michael Gapen, Morgan Stanley’s chief economist, expects the Fed to pause rate cuts, citing stabilization in the labor market and solid activity data.
Conclusion
The growing disconnect between consumer confidence and macroeconomic performance is a concern that policymakers and economists must address. As the global economy continues to evolve, it is essential to monitor trends and expert insights to better understand the complexities of the global economy.