Investing in the “Land of Confusion”

If you asked the average investor to pick one work to define 2026 so far, it would probably be:

Confusion.

From hot-and-cold headlines to surprising new conflicts, this market seems like it’s sending mixed messages on whether you should be buying or selling. It’s not crashing, but it’s also not surging. It seems like folks are holding out for some kind of overall resolution, and all they’re getting is more confusion.

But when you take a Moneyball approach and filter out the “noise” from the real impactful data, you’ll start to see the direction that’s taking shape out there …

Click the video below to get started:

Video transcript:

Welcome to Moneyball Economics.

I’m your host, Andrew Zatlin, and today we are going to review two pieces of data that came out, both of them consistently pointing to a strengthening US consumer.

And while that’s good news for the US consumer, it’s great news for the US economy…

Because let’s face it, over 70% of the US economy depends on consumer spending activity.

So let’s talk about the first piece of data. It comes to us from ADP.

ADP is America’s largest paycheck processing company, something like 25% or so. All paychecks are handed out through ADP. So they have a pretty good line of sight to hiring trends and salary trends and so forth.

Every week, ADP likes to release a snapshot of hiring. What they do is they do a four-week rolling average and they say over the past four weeks, the average weekly number of people hired or fired is X.

Now this is where it gets interesting. About a month ago, month of February, they were saying it was around 15,000 jobs per week, so about 60,000 for the month. For the four weeks ending April 4th, so pretty much the month of March plus. ADP said that we have hired almost 55,000 people per week, 220,000 new people in the workforce.

Now that’s huge. Is that the actual number?

Well, I’m not going to get lost in agreeing with ADP or not. That’s not the point. And ADP has kind of a sloppy history with their data. But suffice it to say, we’ve got one month at 60 or so, the next month at 220 or so.

That is a rocket ship taking off. And that is also consistent with what I’ve been sharing with you, that companies came storming in following all the storms and they are hiring. They see 2026 as a strong year for economic activity.

Now, we care about this ADP data because it just confirms we are seeing a lot more jobs out there. And if there’s a lot more jobs out there, that means that there’s a lot more spending going on in this economy. And that brings us to the second data point, which is retail spending.

Off on the side, every month we get from the Census Bureau a snapshot of retail spending, but while that’s considered the ultimate proxy for consumer spending, I’d like to kind of raise my hand at this point and say it actually is a small slice of consumer spending.

It looks at everything that hit a cash register, kind of, sort of. So it looks at, did you buy furniture? Did you buy gas, blah, blah, blah. But it doesn’t track things like, did you go out and have fun? Did you go to a baseball game, a concert? Did you go take a trip somewhere? Did you stay in a hotel?

In fact, most of the consumer economy is missed by this retail number, but it’s kind of as good as it gets and more critically it’s what the marketplace looks like. So what did it do? It came out a blistering high number, 1.7%.

Now that’s almost what I had predicted a little bit above what consensus had predicted. A lot of that has to do with gas. Now, this is the key thing with this strong number. When we strip out the effect of gas, it’s still strong under the surface.

Consensus missed that strength. We did not, because my vice index said consumers are continuing to spend. And that makes sense. Look, we know there was an oil shock in March. We know that. But guess what? That’s just relative to where we’ve been.

Oil prices have been trending down for the better part of a year and all of a sudden, they shot up. But it’s not that ugly. Yes, they went up, but they went up to levels that we saw in 2023 and 2024. So recent history, oil’s been at this level and even higher. June 22, they were at five bucks a gallon.

Bottom line, yes, this was a hit to the pocketbook, but it’s something that consumers could absorb. They could look past it. And that’s what they did. They absorbed it. And we see that in all of the retail spending. There were about three things that happened that pushed up retail spending, one of them being gas, obviously. Another one was the fact that the storms were over in March. And so people kind of got out and started doing some of these home projects that they intended to do.

So we saw appliance sales go up. We saw building material sales go up. We saw just a whole lot of things move up that were related to the fact that people couldn’t spend while there were storms going on, and now they could.

Well, fast forward, another part of the spending was Amazon in March had this spring sale event, and that added a lot of spending. Kind of pulled it in a little bit, if you will.

But the third element, the one that’s most telling to me is there is one category of spending that reflects on consumer discretionary spending of that entertainment and fun stuff like the concerts. And it’s a category called food services and drinking.

Basically, do people feel up to going out, getting a bite to eat, going drinking, and so forth? It’s a consumer sentiment gauge as I see it. And guess what?

It went up.

The key thing here is not just, hey, it went up, weather was good so they could go out. It’s consumers continue to spend the money that reaches their wallets. And that’s key because the amount of money, that amount of disposable income and discretionary spending is actually increasing. And it’s increasing because inflation has actually been going down.

Look past gas prices. Food prices have been going down as have a lot of other basic things. That frees up money to spend. Inflation’s not taking as much of a bite out of your wallet. At the same time, second thing, salaries have been going up.

And then as we just mentioned, it looks like there are more people now in the workforce to spend those higher salaries. So put it all together. What we’ve got is we’ve got a healthy economy. We’ve got a healthy consumer who is willing to spend their money at the end of the day.

And if they’re willing to spend their money today, it means they feel pretty good about not just today, but about tomorrow. And that’s key. See, going forward, I anticipate a consumer sentiment that remains positive, especially when this external gas shot goes away. And then on top of that, we’ve got more jobs being added.

Practically speaking, again, more jobs added, that’s more money flowing into the system, but it also lends itself to this positive feedback loop. People start to see more job opportunities. Their friends are working more. It creates a sentiment of positivity that leads to more spending.

I believe strongly this economy’s going to be roaring in the second half and it’s going to pull the stock market ever higher. We’re in it to win it, folks.

Zatlin out…