it’s improved a bit over the last few months but consumer sentiment is still extremely depressed of course there’s high inflation but given the low joblessness rising wages and overall economic growth it’s not normal for so much pessimism a widely followed user in what’s colloquially known as finance twitter by the handle quantian decided to drill into the data this person constructed a model to forecast consumer sentiment using nine variables like the inflation rate house prices dollar strength stock prices and so on to predict consumer sentiment and it worked a model using data from 1978 to 2019 was able to come up with a predicted number with an 87 correlation to the actual university of michigan series then that same model was then used to predict sentiment after covid struck and as the chart shows the model completely broke down marketwatch also ran a regression thanks to a big assist from chatgpt the five factors are the unemployment rate yearoveryear consumer price growth yearoveryear house price growth mortgage rates and gasoline prices using data from 1990 to right before covid struck like quantian’s the same big gap emerged a pretty decent model predicting sentiment before covid 86 correlation and then one that overestimated sentiment substantially following it what quantian then did was reestimate the model to figure out what changed and there were three takeaways consumers cared a lot less about unemployment than previously want house prices to fall rather than rise and hate high interest rates reached over social media the twitter user acknowledged that regressions aren’t foolproof “just a way to tease at the data and see if there’s anything interesting there” in order quantian expressed the most confidence that   americans are more sensitive to inflation and less sensitive to unemployment than they were historically   a large driver of the current unhappiness is rising mortgage rates and house prices of course if economic preferences changed perhaps they could change again if disinflation continues perhaps american economic views will return to a more normal pattern but right now americans are really fed up with inflation and don’t like high interest rates either