Everyone Is Still Spending

By Noah Rothman

Thursday, May 07, 2026

 

In a conventional signal of tough times ahead, American consumer confidence declined markedly in April. Surging fuel prices and the deteriorating global economic outlook associated with the war in Iran only compounded the public’s preexisting economic anxiety.

 

In a survey released at the end of last month, Gallup pollsters found that the “high cost of living” — while down ten points from the last year of Joe Biden’s presidency — was still the most significant financial problem for a plurality of American households, with the growing cost of oil and gas rising in the ranks.

 

Most indicators suggest that Americans were prepared to pare back their discretionary spending in advance of what they expect will be hard times to come. So far, however, those indicators have not given way to the kind of belt-tightening one might expect.

 

“Corporate America is delivering the goods this earnings season,” Axios reported of some better-than-expected corporate earnings reports, “dampening fears about the economy, even as rising energy prices threaten to undermine the momentum.”

 

The outlet cited the experience of several major firms in a variety of sectors, some of which rely on more discretionary dollars than others. But all report that Americans are still spending:

 

·         Uber: After reporting a 25% rise in bookings, CEO Dara Khosrowshahi told CNBC: “The consumers are spending, they’re spending locally, and we don’t see any signs of that weakening at this point.”

 

·         Disney: The company recorded better-than-expected operating income at all three of its divisions — entertainment, experiences and sports — as Bloomberg noted. Consumers are visiting parks at a “healthy” pace, Disney said.

 

·         CVS Health: The drugstore chain and Aetna owner raised its 2026 earnings guidance as medical costs fell sharply.

 

·         Novo Nordisk: The GLP-1 drug maker raised its guidance after its first oral weight loss pill got off to a promising start with 2 million prescriptions already.

 

Steady consumer spending patterns also suffice to explain the stock market’s performance, which has largely failed to reflect the shock associated with surging energy costs. MarketWatch analysts observe that, contrary to conventional wisdom, markets are not being kept afloat by investments in the “AI trade” alone (although projected spending on AI-related infrastructure is a major factor).

 

Even McDonald’s — the profitability of which has long been informally considered a rough leading indicator of how consumers are feeling about the discretionary cash in their wallets — posted better-than-expected earnings. But the pain may still be coming, according to CEO Chris Kempczinski. “Clearly, when you have elevated gas prices, which is the core issue that I think we’re all seeing about in the press right now, gas prices, inflation on that, that is going to disproportionately impact low-income consumers,” he said. “And so, we expect the pressures there are going to continue.”

 

That’s wise. The fallout from the protracted conflict in the Persian Gulf will continue to settle over the global economy for months to come, even without the resumption of high-tempo combat operations. But the disconnect between expectations and results when it comes to corporate earnings is still meaningful.

 

For several months, even before the Iran war, pollsters observed a discrepancy between how sour voters had become about the economy at a macro level and their relatively buoyant assessment of their personal financial situation. Some analysts interpret this to mean that voters are not actually unhappy about the economy. Rather, they’re trying to signal to the political class their disquiet over other aspects of the sociopolitical economy with which they take issue.

 

That seems like a condescending outlook to me. The public understands perfectly well that, even if they’re doing all right individually, the rising cost of commodities like energy and other industrial inputs will have downstream effects that they will eventually experience themselves. Voters are sharp enough to anticipate hardship, even if they’re not feeling it immediately.

 

But if American consumers do anticipate hardship, they’re not yet acting like it.