Stress On Consumers and What It Means for Crypto

Crypto markets continue to chop this week, with some outliers in the altcoin sector seeing double digit gains. Whether this proves to be a flash in the pan or a sign of renewed appetite, remains to be seen. I want to take this week to talk about the macro backdrop —specifically US consumer sentiment.  

Now before we start diving in, to touch base on the outcomes of our last squawk, we did see inflation come out lower than expected which has led to a further drop in future inflation expectations. This is still a trend I’m watching very closely. Have a read or watch if you missed it.  

Now back to consumer sentiment. Why does this matter for crypto going up or down?  

Simply put it sets the tone for spending, and spending is still the engine of growth. If confidence slips, people don’t just drop everything and panic. But they could get a bit more cautious in their spending. Fewer big-ticket purchases, less of a conviction to trade or invest, more “let’s wait” vibes.  

It’s also important to think about crypto markets, like many other markets, as being forward looking. Markets digest what they know now and try to price in where things are going next.  

So, you can start to see why understanding how financially stressed consumers are becomes so important  

Let's dig in. 

The full picture 

The US economy is the largest consumer base in the global economy, even a small slowdown in spending starts to show up in economic growth measurements like Gross Domestic Product (GDP) and could spill over into other geographies. In fact, consumer consumption accounts for just shy of 70% of the GDP figure.  

So, let’s start to connect some dots on how stressed consumers are.  

Starting with sentiment, The University of Michigan consumer sentiment index is sitting at 52.9. We’ll show a chart below, but at this level consumers are historically more cautious than optimistic  

Secondly, we can tie in how much are people saving. The Personal Saving Rate in the US is currently about 3.5%. Not a crisis level, but the trend has been downward since 2024. 

And when we tie those data points into household debt service, which is the share of someone’s income that goes towards paying back debt like mortgages, credit cards, car loans or student loans, things start to look a little burdened. The current figure sits at 11.3%, this is a decent slice of people's paycheck already squared away on paying back their debt, before they have what’s left to spend on anything else.  

Employment revision 

Now layer this on top. 

The US Bureau of Labor Statistics recently revised down its employment figures for 2025 through the annual benchmark process. And the result is the economy created fewer jobs than what was originally reported. 

The revision reduced previously reported payroll gains by 862,000 jobs in 2025. This is not saying that the labour market is collapsing, but it does tell us the US labour market was not as strong as previously reported.  

Chart of the week: Measuring US consumer stress 

So, lets step back and look at the story in front of us.  

Job creation for 2025 is now lower than the market was led to believe and individuals in the US are spending more on debt and saving less. This isn’t exactly screaming a crisis or calling for a crash but it is showing the financial burden on everyday people right now is getting worse and explains the why behind consumer sentiment being relatively low.  

While some of these metrics have historically looked worse, it does give us a narrative of how everyone has been feeling in the post-covid era.   

Turning back to sentiment specifically, the backdrop looks like mid-2022, a period where we were faced with peak inflation concerns and monetary tightening.   

 But to put a flipside on all this, while we dont' know when or where the bottom of the market will be, in 2022 these were the conditions where we did see sellers start to slow down, and buyers start to step in. But as always past performance doesn't guarantee future results. 

See you all again next time.