The tentpole US consumer confidence survey appears to be losing its grip on reality, with a bias to negativity. Effective as a radar sweep of American polarization, its relevance as a leading indicator is in question.

Respondents seem to be using polling on their willingness to spend as an opportunity to express support for, or give a kicking to, the Trump administration – to an extent that is limiting the predictive quality of the headline index.

This is bad news for dealmakers, who need to stay on the lookout for alternative signals of consumer health.

Any evidence of weakening US consumer spending would imperil consensus 2026 GDP growth expectations of 2.0%-2.1% and dampen animal spirits, as economic slowdowns correlate strongly with moderated M&A flow.

Which is why the Conference Board’s Consumer Confidence Index has historically held such an important role. January’s reading sustained the indicator’s grim progress of late, falling to just 84.5 – below the pandemic-related trough and the lowest print for almost 12 years. Worse, the Expectations Index dropped 9.5 points to 65.1, well south of the 80 threshold typically heralding a recession.

Yet consumers reporting caution in confidence surveys are simultaneously increasing their spending and accumulating wealth. We’ve got the receipts – literally.

Personal consumption has not deviated from its long-term growth trend recorded since 2010, with a hike of 2.6% in the 12 months to November 2025. Disposable personal income grew by USD 12bn (up 0.1% month-on-month) in October 2025 and USD 63.7bn (up 0.3% MoM) in November 2025. Household wealth statistics are also heading top-right.

How do we square the circle of consumers continuing to dip their hands in their pockets while apparently feeling nervous about it? Partisanship appears to be playing the defining role.

While Republican consumer confidence sits at a hearty 120, Democrats and independents are down at 70.

There’s even more under the hood. Despite the column inches dedicated to millennial and Gen Z dissatisfaction with their economic prospects and hopes of buying a home, these generations record the highest consumer confidence by generation – both above 100, on a six-month moving average.

If those entering the workforce and engaging in career building are upbeat, that’s a very positive indicator.

Without wishing to waste any time getting under the hood of doom-laden cable news viewership, it’s worth noting Gen X and baby boomer consumer confidence is much lower, hovering around 85.

It consequently feels compelling to assign headline survey weakness more to the fracturing information environment than the financial realities facing American families.

This creates an imperative to find alternative indicators of consumer health. And three areas present clear risks for closer scrutiny: socioeconomic divergence, tentative signs of jobs weakness, and inflation stickiness.

Increasing evidence points to consumer willingness to spend being linked to incomes. This is the concept of the K-shaped economy – where wealthier citizens pull away as those with fewer means feel the pain.

Studies published by the Philadelphia Fed and New York Fed show not only that lower-income households are more likely than affluent Americans to report efforts to reduce their spending, but also that consumer spending growth among college graduates is accelerating away from that for non-graduates.

The Philly Fed report noted that respondents in the income brackets below USD 40,000 (28.2%) and USD 40,000-USD 69,000 (25.2%) were far likelier than those with higher salaries to report changes in personal circumstances – including employment status – as impacting their spending decisions.

While layoffs and quitting remain broadly flat, it is notable that the job openings rate has trended down markedly in recent months, falling from 4.6% in September 2025 to 3.9% in December 2025. The number of job openings in December 2025 fell by 386,000 to 6.5 million – and was down almost 1 million over the year.

President Trump’s immigration restrictions may cushion the impact of this fall. But restricting workforce growth, ongoing tariff impacts, and a ballooning fiscal deficit threaten to keep inflation sticky enough to limit the Federal Reserve’s rates easing pathway.

This would have a major impact on consumer sentiment, with that Philly Fed report again showing inflation was far-and-away the most cited factor in impacting survey respondents’ spending. Intriguingly, price hikes were pointed to by 58.2% of respondents with incomes of USD 100,000-USD 149,000 as impacting their consumption – much higher than the 49.3% of those in the under-USD 40,000 bracket.

Any sign of jobs weakness accompanied by struggles to keep a lid on prices could crystallize consumer concerns into tightened spending – especially if AI makes inroads into graduate, white collar worker numbers.

The impact on corporate performance would be sector dependent, hitting consumer-facing businesses first. Indeed, might we look back at January’s Consumer & Retail M&A slowdown as a sign of things to come? At just USD 4.69bn, US target volumes fell 13.8% year-over-year, according to Mergermarket data.

This may just be a pause for breath.

Kimberly-Clark’s pending USD 51.4bn deal to acquire consumer health player Kenvue was only announced in November; the proposed Kraft Heinz demerger was unveiled in September. Both deals highlight the mix of hunger for scale and brand positioning that characterize boards’ sophisticated understanding of customer trends – and how to align with them via corporate footprint evolution.

In truth, nothing has emerged so far this year to derail consensus expectations of another strong year for global M&A, with the US once again at the driving seat. But this solid outlook must be routinely marked-to-market against a higher risk geopolitical and macroeconomic environment.

Given partisanship is a powerful drug, and the salience of midterm elections will only be amplified the closer we get to November, there is clear impetus to frontload strategic M&A in 2026 – lest consumer spending and sentiment converge in the wrong direction.

Continental Drift is a weekly column offering commentary on the macroeconomic, political, and policy forces shaping the M&A landscape across the US and Europe. The opinions expressed here are those of the writer only.