Joanne Hsu, director of the University of Michigan’s Surveys of Consumers, explains why consumer sentiment has fallen to 47.6—the lowest reading in the survey’s 74-year history—driven primarily by persistent frustration with high prices, a weakening labor market, and fresh anxiety from the Iran war’s impact on gas prices.
She argues the disconnect between record-low sentiment and record-high stock markets reflects a bifurcated economy: wealthy consumers with large portfolios have recovered quickly, while lower-income households are being squeezed on both the price and income sides simultaneously—unlike 2022 when strong labor markets offset inflation pain.
The critical question going forward is how long Strait of Hormuz disruptions persist and how much higher energy costs pass through to other consumer prices, with a prolonged supply shock risking a non-virtuous cycle that tips the economy into recession.
Historic low reading in context: At 47.6, sentiment is worse than 2008, COVID, the dot-com bust, and near 1980s recession levels; methodology has evolved over 74 years (door-to-door → landline → cell → web) but core questions about personal finances, business conditions, and durable goods buying haven’t changed.
Why stocks and sentiment diverge: Consumers with large stock portfolios rebounded quickly from Liberation Day tariffs, while those at the bottom of the wealth distribution are pulling the aggregate index down; the wealth effect is real but doesn’t translate dollar-for-dollar to spending.
Post-pandemic indicator breakdown: Traditional signals like the inverted yield curve and Sahm rule have failed to predict recession; mental health, trust in institutions, and polarization have all deteriorated in ways that affect how Americans perceive the economy independently of actual conditions.
Key difference from 2022: Back then, consumers felt terrible but had strong incomes and tight labor markets supporting spending; now they’re stretched on both sides—weaker labor markets combined with lingering price fatigue—making the resilient-consumer narrative no longer reliable.
Red flags for consumer spending: Elevated delinquencies, heavy credit card usage, very low savings, and a slowdown in spending in recent months suggest consumers are in a precarious position; future demand likely depends mainly on wealthier households.
The inflation expectations paradox: Short-run inflation expectations surged after the Iran conflict started but long-run expectations barely moved; simultaneously, consumers complaining about high prices (red line) never came down from the 2022 peak even as actual inflation cooled—a historical anomaly.
Limited front-running of purchases: Only a small share of consumers say “buy now to avoid future price increases”—no surge in pre-emptive buying because people don’t feel confident enough in their incomes to make big-ticket purchases even while bracing for pain.
Speed of geopolitical transmission: Sentiment and gas price expectations broke sharply within days of military activity starting March 28; gas price expectations doubled and tripled almost immediately, though consumers didn’t conflate this with overall inflation to the same degree.
Alignment with IMF outlook: Hsu says consumer data is “highly consistent” with the IMF’s adverse scenario of 2% global growth and 5.4% inflation if disruptions continue; consumers are confident the short run will weaken but reserving judgment on the long run.
Ken Griffin recession warning: Hsu agrees broadly that a 6-12 month Strait of Hormuz shutdown would be very challenging—shut-in oil production can’t be restarted like a light switch, and a negative feedback loop between supply constraints and consumer weakness is a real risk.
Social media and sentiment: Algorithmic newsfeeds (starting late 2010s) have polarized and emotionalized economic views more than social media itself; we may be in “an era of diminished expectations” where comparing today’s readings to historical troughs is less meaningful than watching the trend.
Credit data caveat: Recent Philly Fed research suggests that improvements in delinquency metrics among some groups reflect lenders cutting off riskier borrowers, not genuine financial health—lower and middle-income families are being shut out of credit entirely rather than thriving.
Labor market concerns: Over two-thirds of consumers now expect unemployment to rise in the year ahead (double the share from early 2025); worries about job loss have shifted from tariffs last year to AI this year; even high-achievers (e.g., Harvard med students) feel threatened.
Unusual consensus: The post-Iran deterioration spans all age, income, and political party groups—unlike typical partisan sentiment swings, this is a broad-based consensus that the economic outlook has worsened.
What to watch: The single biggest variable Hsu is monitoring is whether elevated gas prices pass through to other consumer prices, which will determine whether this becomes a short-term shock (like the liberation-day tariff scare) or a more lasting inflationary problem.
The Mises Institute’s Power and Market podcast covers the political soap opera around the Fed (including Trump’s ongoing battle to oust Jerome Powell and install Kevin Warsh), arguing that swapping personalities won’t change anything fundamental because the problem is the Fed itself—not any individual running it.
The hosts detail how the Fed is quietly doing stealth quantitative easing (buying $40 billion/month in Treasuries) while pretending to pursue “quantitative tightening,” with CPI spiking to 3.3% year-over-year and PPI at 4%, even as the administration’s Iran war will add trillions more to deficits. They argue the economy has become dangerously bifurcated—great for older asset-owners and oligarchs, brutal for young people and wage-earners—with consumer sentiment at record lows while the S&P 500 hits all-time highs, reflecting a casinofied, financialized system completely disconnected from real economic production.
Fed political drama: Warsh’s confirmation is held up by Republicans (notably Thom Tillis) demanding the DOJ end its probe of Powell; Judge Jeanine is reportedly leading the prosecution; Trump has threatened to fire Powell, raising legal questions about removing Fed governors.
The Tyrant vs. The Tyranny: Drawing on Rothbard’s discussion of Thomas Paine, the hosts argue the right has become too focused on removing individuals (Powell, etc.) rather than dismantling the systemic problem—the Fed itself—meaning a new chairman won’t meaningfully change monetary policy.
Stealth QE exposed: Despite claims of quantitative tightening, the Fed has been buying $40 billion/month in Treasuries since December (over $160 billion added) using newly created money; they’re using reverse repos and other levers to inject liquidity through “a different door” while signaling restraint.
Inflation accelerating: CPI jumped to 3.3% year-over-year (highest since 2024), month-over-month CPI over 0.8% (highest since 2022), and PPI at 4% year-over-year; cumulative price growth since 2020 is roughly 28% CPI and 29% PPI.
The real 2% target is 3%: The hosts argue the Fed’s actual de facto inflation target is now 3%, not 2%, pointing to the fact that the Fed cut rates in September 2024 and continued cutting even as inflation headed back up—likely driven by electoral politics and the need to keep Treasury financing costs manageable.
Why the Fed can’t raise rates: With deficits already $1.6-$1.8 trillion annually and the Iran war adding another trillion or two, the Fed has to purchase Treasuries to keep interest rates from spiking, regardless of what inflation does—revealing its true mandate is financing government spending, not price stability.
Oil/Hormuz economics: Trump’s claim that closing the Strait of Hormuz benefits America because “we produce oil” is economically illiterate—oil trades in a global market, so reduced supply anywhere bids up prices everywhere; the only way his argument would work is banning US oil exports (a communist-style move).
Supply shocks aren’t technically “inflation”: Connor distinguishes that war-driven price increases from supply destruction aren’t monetary inflation in the Austrian sense, but CPI/PPI still capture them; this puts the Fed in a bind where both “sides of the dual mandate” deteriorate simultaneously.
Economic destruction ahead: Beyond oil, the war is disrupting plastics (medical supplies, IV bags, syringes, construction piping) and fertilizer supplies (hitting farmers during planting season)—real destruction that will show up in consumer prices months from now.
Employment data is bad: Household survey shows 661,000 fewer jobs over the past year; establishment survey shows anemic 21,000/month growth over the year (vs. healthy 150,000+); hiring is at levels not seen since 2014 (excluding COVID); initial numbers look good then get revised sharply downward.
Consumer sentiment at record lows while S&P 500 hits new highs—showcasing how disconnected markets have become from the real economy, driven by a bifurcated system where asset owners thrive and wage earners struggle.
Casinofication of the economy: Young people view “capitalism” as insider trading, pump-and-dump schemes, Kalshi/prediction market manipulation by politicians, and Barstool-style degenerate trading advice—pushing them toward anti-capitalist conclusions even though the real problem is central planning, not markets.
Social media amplifies dumbness: In 2007, bag boys doubling as mortgage brokers spread bubble logic in person; today, the same delusions spread instantly across social platforms, and young people lacking experience can’t distinguish con artists from legitimate advice.
Things don’t change until they do: Drawing parallels to the Soviet Union (1986), American colonies (1774), and French nobility (1788), Ryan argues regimes can appear permanent right up until they collapse; the Orbán loss in Hungary (attributed to economic headwinds) suggests even entrenched propaganda states can fall quickly.
Choice framework: The coming choice isn’t between prosperity and displacement—it’s between temporary economic displacement (with the possibility of real reform) and continued, worsening tyranny as the ruling class doubles down on the mirage that they can manage everything.
Rick Rule provides a long-term, fundamentally-driven commodity outlook in this Palisades Gold Radio interview, arguing that the Iran war has front-loaded the oil price move he had originally expected by 2029, with current WTI futures around $95 being anticipatory pricing rather than reflecting actual shortage (tanker cargos south of Hormuz already command $40/barrel premiums).
He emphasizes that global underinvestment in sustaining capital of roughly $1 billion per day hasn’t changed—in fact, destruction of Qatari LNG and Iranian Kharg Island infrastructure will take up to five years to fix, making the late-decade supply crunch worse regardless of how the war ends.
Across commodities, Rule sees most “hate” having disappeared from the market (leaving geographic hate—Russia, Iran, Middle East—as the remaining opportunity), and frames gold as essential portfolio insurance with real estate, food, and healthcare looking cheap when measured in ounces.
Oil is anticipatory, not shortage-driven (yet): Futures at $95 reflect expected shortage; actual FOB cargos south of Hormuz trade at $135-145; if the war continues 2-3 more weeks, the world will experience real rationing-by-price rather than inventory-drawdown pricing.
50%+ of global export crude transits Hormuz: Headlines cite 20% of world crude, but the more troubling number is that over half of exported crude moves through the strait; Western Hemisphere is relatively insulated, but the eastern Pacific Basin faces real problems.
Long-term underinvestment thesis intact: Global industry underinvests ~$1 billion/day in sustaining capex; destruction of Qatari LNG and Iranian Kharg Island infrastructure will take up to 5 years to rebuild, making the 2028-2029 supply crunch worse than previously expected.
1970s Arab oil embargo as parallel: Decades of underinvestment combined with Persian Gulf supply constriction drove crude from $3 to $30 over the decade; Rule isn’t forecasting a 10x move but stresses the late-decade setup is very real.
US drills, Canada hoards: US Permian basin is “drill baby drill” with byproduct gas overwhelming infrastructure (collapsing Henry Hub prices); Canadian companies are paying down debt and returning cash to shareholders rather than reinvesting, which Rule attributes to anti-oil-and-gas political leadership.
LNG opportunities: Woodside (Australia’s Northwest Shelf) is a standout; US producers benefit from sub-zero lifting costs on byproduct gas—Devon, Occidental (with balance sheet caveats), and Cheniere for pure LNG infrastructure exposure.
Trimming oil equities dilemma: Rule’s speculative basket hit his 3-year targets in 3 months; his disciplined side says sell half of the Canadian basket, but his “greedy” side wants to hold because the 2028-2029 setup will deliver these prices again anyway.
Helium mid-investment cycle: Qatar’s outage ended the helium glut; best geological prospects are Saskatchewan (Athabasca basin skirts), South Texas (Fraoa trend), and Kazakhstan—all tied to historical uranium mineralization since helium forms from uranium decay.
Fertilizer geopolitics: Gulf gas outage disrupts nitrogenous fertilizers long-term; Russia is the largest and lowest-cost potash producer but underinvested due to Ukraine war; Saskatchewan producers (Nutrien) win if Russian supply remains constrained; Morocco dominates phosphates.
Long-term demographic nutrient thesis: 8 billion people, with 1 billion more to lift out of extreme poverty over the next 20 years; more calories per capita requires modern fertilizers; Rule’s 25-year nutrient investments have delivered superb compounded returns through dividends alone.
Gold as sanity, not speculation: Rule has generated ~9% annual IRR in gold over 26 years; measured in gold, real estate, food, and healthcare all look cheap; Turkey selling 60 tons demonstrated gold’s role as the world’s most liquid collateral—”not holding gold is irresponsible.”
Hoping gold falls: As a saver rather than speculator, Rule wants gold $400-500 lower so he can buy more; he was a buyer in January when he rotated from silver into gold and silver equities.
Silver no longer hated: Rule exited 80% of physical silver in January during the parabolic move; silver equities still price in ~$45 silver vs. actual $75, offering asymmetric protection; he won’t be a silver speculator again until silver returns to hatred (possibly 12-15 years away, though a 1975-style temporary crash during a bull market is possible).
Hate has largely disappeared: The market lacks hated commodities; remaining hate is geographic—Russia (inaccessible due to sanctions), Iran (Rule would love to invest if allowed), Dubai/Abu Dhabi/Qatar real estate, and conventional offshore oil explorers in frontier markets.
Gold M&A wave coming: The G Mining/G2 deal at a 72% premium (still accretive) illustrates the opportunity in single-asset producers trading at discounts to multi-asset producers—these spreads close immediately on takeover.
Junior explorer reality check: Merging every junior explorer globally would lose ~$2 billion/year; ~1,500 junior companies exist but only ~200 are viable; success requires tenacity, 5-6 year holding periods, and tolerance for 50% drawdowns within a value story.
Developers: pick track records: “Bay Street Cowboys” (financial amalgamators) always round-trip; genuine developers like G Mining (Gignac family building orogenic gold mines in tropical high-rainfall environments for 40 years) have returned 10x in 3.5 years and remain undervalued.
Free portfolio ranking service: Rule has ranked nearly 100,000 portfolios over 35 years at ruleinvestmentmedia.com (natural resources only, no crypto/tech/cannabis); his upcoming sold-out Boca Raton conference is available online with a full money-back guarantee (less than 0.1% refund rate over 30 years).
Cut through the clutter and mainstream media noise. Get free, concise dispatches on vital news, videos and opinions. Delivered to Your email inbox daily. You’ll never miss a critical story, guaranteed.