Moody’s Mark Zandi Warns Wall Street is 'Too Optimistic' About the American Consumer: 'I Am Getting More Nervous...'
Moody’s Analytics Chief Economist Mark Zandi cautioned that forecasts for consumer spending lack solid fundamentals, stating his growing unease over wage stagnation, dwindling savings, and rising borrowing costs. Pushback on Consumer Resilience During the latest Inside Economics podcast, Zandi challenged the prevailing narrative of consumer durability championed by Visa Inc. (NYSE: V ) Chief Economist Wayne Best. While Best forecasted a 2.2% real GDP growth for 2026 and cited ongoing consumer “resilience,” Zandi argued the macroeconomic data does not support a robust outlook for lower- and middle-income households. "I am getting more nervous the less nervous you guys sound," Zandi told his co-hosts and Best. "It just feels like we’re too optimistic about the consumer." Zandi pointed to flat real wage growth, a drop in the savings rate, and rising interest rates as core concerns. He noted that after-tax income adjusted for inflation is “not going anywhere,” and consumers lack the ability to extract cash through home refinancing due to mortgage rates sitting well over 7%. "Something doesn’t compute," Zandi stated, questioning how the economy sustains steady growth under such financia
Moody’s Analytics Chief Economist Mark Zandi cautioned that forecasts for consumer spending lack solid fundamentals, stating his growing unease over wage stagnation, dwindling savings, and rising borrowing costs. Pushback on Consumer Resilience During the latest Inside Economics podcast, Zandi challenged the prevailing narrative of consumer durability championed by Visa Inc. (NYSE: V ) Chief Economist Wayne Best. 2% real GDP growth for 2026 and cited ongoing consumer “resilience,” Zandi argued the macroeconomic data does not support a robust outlook for lower- and middle-income households.
"I am getting more nervous the less nervous you guys sound," Zandi told his co-hosts and Best. " Zandi pointed to flat real wage growth, a drop in the savings rate, and rising interest rates as core concerns. He noted that after-tax income adjusted for inflation is “not going anywhere,” and consumers lack the ability to extract cash through home refinancing due to mortgage rates sitting well over 7%. "Something doesn’t compute," Zandi stated, questioning how the economy sustains steady growth under such financial strain.
Read Also: Fed’s Goolsbee Warns AI Data Center Boom Could Overheat US Economy — ‘The Bigger The Hype,’ The Bigger The Risk Inflation and Interest Rate Pressures Best maintained that consumers are finding ways to navigate higher prices through price shopping and the temporary boost from tax refunds. He stated that an income proxy measuring wages, hours worked, and employment remains steady, showing growth of around 4%. However, Zandi and Moody’s Analytics Senior Director of Global Forecasting Marisa DiNatale highlighted the prolonged impact of geopolitical conflicts on diesel and jet fuel prices, which they argued are eating into disposable income.
DiNatale expressed specific concern for the bottom 40% of income earners, noting they are spending a larger share of their budgets on essentials. Zandi added that rising yields are exacerbating the situation, pointing out that credit card and auto loan rates are climbing as the Federal Reserve continues to tighten monetary policy. "If the equity market hangs tough, then that should be okay," Zandi said regarding affluent spenders. But for the broader public facing higher prices without real wage gains, he maintained his skepticism about near-term consumer strength.
How Have Stocks Performed in 2026? 84% year-to-date. 13% YTD. On Tuesday, the SPDR S&P 500 ETF Trust (NYSE: SPY ) and Invesco QQQ Trust ETF (NASDAQ: QQQ ), which track the S&P 500 and Nasdaq-100, respectively, closed mixed.
93. 88. 01%. Read Also: BlackRock Says AI Value Is Shifting Beyond Software, Flags ‘Physical AI’: Why MU, VRT And CEG Are in Focus Disclaimer: This content was partially produced with the help of AI tools and was reviewed and published editors.
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