The consumer isn’t invincible
Moody’s Analytics chief economist Mark Zandi is basically telling Wall Street: “You’re a little too confident here.” On the latest Inside Economics podcast, he argued that the rosy take on the American consumer doesn’t match the data — especially for lower- and middle-income households.
He pointed to flat real wage growth, a fading savings cushion, and borrowing costs that keep climbing like they’ve got somewhere important to be. In other words, the consumer isn’t exactly strolling into 2026 with a backpack full of cash.
The rich can shop. Everyone else is sweating.
Visa chief economist Wayne Best pushed back, saying consumers are still finding ways to adapt through price shopping and a temporary boost from tax refunds. He also said a wages-hours-employment proxy suggests growth is still holding up around 4%.
Zandi’s reply was basically: sure, but for who?
- Households at the bottom 40% are spending more on essentials
- Mortgage rates above 7% make home equity cash-outs a lot less useful
- Credit card and auto loan rates are rising as the Fed keeps policy tight
- Geopolitical pressure is keeping fuel costs sticky, which quietly eats disposable income
Why investors should care
This isn’t just econ-nerd debate club. If the consumer really is getting squeezed, that can show up in retail sales, travel, credit quality, and anything else that depends on people opening their wallets without flinching.
The market already loves a good “soft landing” story. Zandi is saying: maybe don’t get too comfy on the couch just yet.
Big picture: if the broad consumer weakens, the whole “economy is fine because spending is fine” trade gets a lot less cozy.