The US economy appears stronger than perceived by Americans, despite weak consumer sentiment and inflation expectations. Recent data suggests that the economy is holding up, with steady jobless claims and low unemployment rates. However, forward-looking data such as consumer sentiment has dropped to its second-lowest level on record, reflecting a widening gap between “hard data” and “soft data”. The latest consumer sentiment reading showed a decline this month, while inflation data indicated a cooling trend. Despite the mixed signals, Wall Street remains optimistic, with the S&P 500 set for its fifth-straight winning session. Analysts from Bank of America believe that weakening soft economic data may be a positive sign for stocks, citing historical trends and avoiding recession.
Source: https://www.businessinsider.com/recession-outlook-us-economy-inflation-job-market-tariffs-consumer-sentiment-2025-5