On-screen text: Vibe check
• GDP growth accelerating
• Consumer sentiment weak
• "Vibepression" persists
Narrator: We need to talk about the vibes.
A couple of data points that we're watching this week: The first one is first-quarter GDP, and it's the final revision for that statistic. Probably not much drama there just because you're not expected to see that material of a change for first-quarter growth.
More focus is now on the second quarter, which is actually looking to be quite strong. All the nowcasts and the estimates are looking to be around 3% on a quarterly basis. And if you annualize that number you get 3%.
Animation: Chart of Real GDP (annualized q/q% change) quarterly from Q1 2022 to Q2 2026 estimate, showing two negative quarters in Q1 2022 and Q1 2025.
Narrator: I think the more important distinction that we have to make is just this divergence that we're seeing between what's called the "hard data," something like GDP, and then what's called the "soft data," something like consumer sentiment.
Animation: Chart of Misery Index (CPI y/y% change + unemployment) showing a small uptick in 2026 compared with the 'Expected' Misery Index which shows a substantial uptick in 2025 and 2026.
Narrator: And when you look at what consumers are most concerned about right now, it's still this combination of fear over higher inflation and fear over job loss.
And if you look at something like the University of Michigan's consumer sentiment survey, which we get an update for this Friday, the expectation is still that sentiment is going to be near these recession-like levels. So it's driving this really big wedge between the hard data, which tell us everything is relatively great, and the soft data, which tell us that things are not so great.
So it's what I've been calling this vibepression, or a depression in the vibes, where people are just not feeling good despite economic growth holding up and the stock market doing relatively well over the past couple of years.
It doesn't necessarily mean that we shouldn't be paying attention to consumer sentiment, but it also means that at least in this cycle, it has not been a good forecaster of where economic growth is going.
On-screen text: [Schwab logo] Own your tomorrow®