Stifel’s strategists, led by Barry Bannister and Thomas Carroll, wrote in a research note that they are simply “uncomfortable” with the S&P 500 gaining 32% off its April 7 intraday low as the latest GDP figures show the actual economy slowing almost to a crawl. They further warn that “hopium” is a powerful drug and that stock markets may be “whistling past the graveyard.”
Simply put, Bannister and Carroll say consumers are not as rich as their account balances show, following the “money illusion” of COVID-era fiscal stimulus that they described as a “World War–level” effort.
With the mighty American consumer running out of breath amid an economic slowdown in the second half of 2025, Stifel sees a decline of 10% or more in the S&P 500.
According to Stifel, the apparent health of the U.S. consumer belies an underlying slowdown, with personal consumption—responsible for 68% of GDP—showing effectively 0% growth year to date. Their research highlights several red flags.
They note that growth in real wage income, the main driver of personal consumption, has slowed to an annual rate of just 1% as stagflation hits.
In addition, monetary and fiscal policies are in a “tug-of-war” that counteract each other, resulting in a minimal boost to consumer spending.
And unlike in 2022–23, there is significantly less consumer savings to support consumption.
The tell here, they say, is that savings rates have come back into balance with equity net worth, after a period when excess money moved first through consumption, then assets. Put another way, America is essentially cash-poor.
What’s more, Stifel’s calculation shows that the personal savings rate has fallen dramatically since COVID, so Americans have binged on spending and now have less cash on hand than in the years before the pandemic.
The analysts warn that this shows the artificial boost has waned and there is no apparent new source of household spending power, amid persistent fiscal deficits and tariffs.
The Federal Reserve has been left in a “too late” posture from stagflation, as the rate cuts that Trump keeps calling for can’t save an “overvalued” S&P 500, with inflation proving sticky and supply constrained in the economy.
Maggiulli, whose book focuses on what his research indicates about the emerging six economic classes of the U.S., said “the economy wasn’t built to handle this many people with this much money.” He cited data showing that the upper middle class, with household net worths between $1 million and $10 million, have ballooned from just 7% of the country in 1989 to 18% as of 2022–23, with much of this run-up in wealth occurring since the pandemic.
