This edition of the Auto Market Weekly Summary includes updates on consumer confidence, Gross Domestic Product (GDP) and inflation, personal income and spending, and housing market conditions. A wave of new data this past week reveals growing consumer strain, with inflation increasing, real incomes declining, and the savings rate falling. And still, consumer spending edges higher.

Bottom Line Up Front

Recent data painted a consistent picture of consumers under pressure. Real disposable income fell for the second consecutive month and is now down against last year, while the personal savings rate dropped to its lowest level in roughly four years. Spending growth continues to outpace income. Three months of elevated gas prices have done their work: Nearly two-thirds of consumers report cutting back on spending due to rising prices. GDP growth in Q1 was revised down to 1.6%, and the trend lines on income, savings, and confidence are all pointing in the same direction – and it’s not a good one.

There is, however, a cautious note of near-term relief on the horizon, with Treasury yields falling this week on renewed optimism that the Strait of Hormuz could reopen. But even a resolution would not quickly translate to lower prices at the pump. The International Energy Agency has flagged the summer months as a period of particular risk, as peak demand arrives against a backdrop of critically low inventories. For consumers, elevated energy costs are likely to persist well into the second half of the year regardless of conflict resolution.

The harder question is whether the equity market’s continued strength will provide a meaningful offset to these pressures or introduce a risk of its own. The S&P 500 has surged on AI-driven optimism, with the Shiller CAPE ratio – a measure of the S&P 500 and average company earnings – recently hitting levels in the low 40s, a level exceeded only once in more than 140 years of market history, at the peak of the dot-com bubble in late 1999. It’s a stark reminder that the wealth effect supporting current upper-income consumer spending could have risks.

For the auto market, one thing is clear: The path to an improving outlook runs through the Strait of Hormuz. The sooner energy prices normalize; the more likely underlying consumer spending can shift from transportation to other goods.

Consumer Confidence

Consumer confidence edged lower in May, as energy prices continue to weigh on households’ views of current conditions.

  • The Conference Board Consumer Confidence Index fell 0.7 points to 93.1, down from an upwardly revised 93.8 in April, remaining below the long-run average.
  • The Present Situation Index dropped 3.2 points to 121.2, as consumers’ assessments of both business conditions and the labor market softened month over month.
  • The forward-looking Expectations Index edged up 1.0 point to 74.4. This reading continues a 16-month streak in which the index has come in below 80, the threshold that typically signals recession risk.
  • One-year inflation expectations held steady at 6.2%, and nearly half of consumers now anticipate higher interest rates over the next year.
  • Two-thirds of survey respondents reported cutting back on spending overall due to rising prices.
  • Plans to purchase autos fell slightly against April’s recent high, but continued rising on a six-month moving average basis, with used vehicle purchasing plans increasing marginally month over month.

GDP and Inflation

The second estimate of Q1 GDP was revised down from 2.0% to 1.6%, weighed down by softer consumer spending and weaker inventory investment.

  • Real GDP grew at an annualized rate of 1.6% in Q1 2026, a downward revision of 0.4 percentage points from the advance estimate.
  • Real final sales to private domestic purchasers – a cleaner gauge of underlying demand – grew 2.4%, revised down slightly from the prior estimate.
  • The PCE price index rose 0.4% month over month in April, lifting the year-over-year rate from 3.5% to 3.8%.
  • Energy goods were the primary driver of the PCE increase, with gasoline and other energy goods jumping 5.5% in the month following a 20.9% surge in March.
  • Core PCE rose 0.2% month over month, slightly below the consensus expectation, though the year-over-year rate ticked up from 3.2% to 3.3%.

Personal Income and Spending

April data from the Bureau of Economic Analysis showed nominal income growth was stagnant, even as personal spending rose for the 15th consecutive month.

  • Personal income showed no growth in April for the second time in three months. On an annual basis, nominal income growth has slowed to 2.5% year over year, the lowest annual rate since April 2022.
  • The personal saving rate fell to 2.6% in April, the third consecutive monthly decline and its lowest level in roughly four years.
  • Expense growth continues to outpace income, so it is not surprising to see the personal savings rate fall. However, there are mild correlations showing that savings rates will decline as the equity market rises. Given the stock market has continued to hit new highs recently, a portion of the decline in savings may stem from the stock market’s wealth effect.
  • Real disposable income fell in April, the second month in a row. It is now lower by 1.1% against last year and another factor that shows growing strain on consumers.

Housing Prices

The S&P Cotality Case-Shiller National Home Price Index rose just 0.7% over the last year, a slowdown from a rise of 0.8% in February and continuing to show the lowest annual appreciation since the summer of 2023. The 20-City Composite rose 0.8%, but that was also a slower rate of growth than seen in the previous month.

  • The housing slowdown continues broadly across the country, with more than half of the 20 tracked metro markets posting annual price declines.
  • CPI inflation continues to outrun home prices, and this is the 10th month in a row where home price appreciation has not kept up with the growth in inflation.
  • Chicago holds the top spot for price appreciation over the last year with values up 6.1%, followed by New York higher (+4.0%) and Cleveland (+3.0%).
  • On the weaker side, Seattle shows the most depreciation against last year, with values down 2.5%, followed by Denver (-2.0%), and Tampa (-1.9%).