Higher Income Consumers Continuing to Spend, Say Dana Telsey

Dana Telsey, Founder and CEO of Telsey Advisory Group, says she expects price increases into 2026.

The high cost of living and angst about the job market are keeping consumer sentiment near record lows. Concerns about personal finances pose a risk to the outlook for household spending which has otherwise held up. Payroll growth remained sluggish in November and the jobless rate rose to a four-year high of 4.6%. Economists anticipate that job growth will remain tepid next year and the unemployment rate will show little improvement, which could continue to weigh on sentiment. To help guard against a deterioration in the job market, Federal Reserve officials earlier this month lowered interest rates for a third straight meeting. However, policymakers are divided about the rate outlook for next year as they look to balance support for the job market with concerns about inflation. While the Michigan survey showed labor market expectations improved slightly this month, nearly two-thirds of respondents still expect unemployment to keep rising over the next year, Hsu said. Consumers expect prices to rise at an annual rate of 4.2% over the next year, an almost one-year low. And they saw costs rising at an annual rate of 3.2% over the next five to 10 years.

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