Consumer Sentiment Hits Decade Low Despite Strong GDP Growth, Revealing K-Shaped Economy

U.S. consumer sentiment fell to its lowest level since 2014 in January despite the economy growing at a projected 5.4% annualized rate in Q4 2025, according to Federal Reserve Bank of Atlanta data. This disconnect reflects a "K-shaped" recovery where high-income households drive spending while lower earners face inflation pressure. Wealthier households account for a larger share of spending and benefit from stock market gains, while inflation has eroded purchasing power for middle- and lower-income families. Pre-pandemic inflation typically ran at 2% or below, but post-pandemic price increases have persisted for over four years. Oxford Economics notes consumer sentiment has become "unusually divorced from the macroeconomy" since COVID-19, with negative economic news coverage and partisan biases further influencing perceptions.