Much like one traveller heading north to the cabin and another south to Florida, consumers and markets went in opposite directions entering the Memorial Day weekend.

On Friday, a new University of Michigan survey found consumer sentiment fell to an all-time low, the same day the Dow surged to a record high.

The stark contrast highlights the growing disconnect between Wall Street and everyday Americans, as investors stay optimistic about AI-driven growth, while consumers feel increasingly pessimistic about the broader economy.

What’s weighing on the people? Nearly 60% of consumers reported that high prices continue to erode their personal finances (see data), as Americans currently feel worse about the economy than at any point during the Great Recession or the pandemic. But why?

Meanwhile, corporate profits have soared: Tech giants have continued to pour record amounts into AI infrastructure, leading investors to bet that the technology will continue to power the economy despite most of the country facing extensive economic pressures.

We’re tracking this issue live on NextGen+. Click the button below to see its status, momentum, and other key developments.

The US and Iran appear to be making “meaningful” progress toward a deal aimed at ending months of conflict and reopening the Strait of Hormuz, though conflicting reports on the negotiations have emerged.

Despite the ambiguity, oil prices sank as both sides inch closer to a deal.

On Saturday, President Donald Trump said that the US, Iran, and several other countries have “largely negotiated” a peace deal that would reopen the Strait of Hormuz.

While the White House has repeatedly suggested the conflict was nearing resolution in the past:

The deal doesn’t address the biggest issues: While a “degree of understanding” has been reached between the two countries, the biggest unresolved issue remains Iran’s nuclear program. The US is pushing Iran to halt uranium enrichment and get rid of its highly enriched uranium stockpiles as part of a peace deal, but Iranian officials say they need guarantees that sanctions will be lifted and frozen assets will be released before they agree.

After the news broke that a potential deal was in progress, crude oil prices dropped 5% on Sunday. The Strait of Hormuz has a massive influence on global energy markets:

It could get much worse: The head of the International Energy Agency warned that the world’s energy crisis could hit a dangerous “red zone” within months if progress isn’t made on reopening the Strait of Hormuz.

We’re tracking this issue live on NextGen+. Click the button below to see its status, momentum, and other key developments.

The Trump administration announced plans to invest roughly $2 billion into the quantum computing industry late last week, sending shares of several related companies to the moon.

The investment in the advanced technology is the largest yet by Uncle Sam, and will draw funds from the CHIPS and Science Act passed under the Biden administration in 2022.

In exchange for its massive backing, the government will receive an equity stake in several of the companies. All in all, nine firms specializing in the tech will get some federal dollars:

The White House has been expanding its investment portfolio: The Trump administration’s push into quantum computing doubles down on its strategy of investing directly in industries tied to national security. Last year, the government acquired a 10% stake in Intel (which Trump says has made the US $30 billion) and has since invested in multiple critical minerals mining companies.

Quantum computers are vastly more powerful than traditional computers (see why). Using them can significantly speed up innovation in key areas like engineering, cybersecurity, national defense, and drug discovery.

So is it a good or bad investment? It’s not immediately clear:

So, when would the gamble pay off? Industry experts assert that the tech's tendency to make errors disqualifies it from commercial use, at least for now. Jensen Huang, CEO of NVIDIA, recently said practical quantum computing applications are around two decades away, while Bill Gates suggested they could arrive in as little as three years.

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While consumers are still spending money (and a lot of it) despite high prices, many have stopped pulling out their wallets for discretionary spending, or what economists call the “fun economy.”

Even with inflation, high interest rates, economic uncertainty, and elevated overall costs for everyday products, consumer spending has remained surprisingly resilient:

But, they have in one category… discretionary spending. A recent BOA analysis of spending data (see here) shows Americans are becoming far more selective with their money, especially when it comes to nonessential experiences and entertainment. While overall consumer spending remains relatively strong, economists say the growth is mostly being driven by wealthier households, while middle and lower-income Americans have largely pulled back.

The divide has become so pronounced that economists are calling the US economy “K-shaped,” a term for when better-off Americans continue spending while everyone else scales back.

According to an analysis from TD Economics:

One YouGov poll found that Americans expecting their finances to worsen this year are planning to cut back heavily on restaurants, entertainment, subscriptions, events, holidays, and everyday conveniences like coffee and ride-sharing services.

There’s still room for splurging, though: At the same time, Americans are increasingly pulling out their wallets for smaller, cheaper indulgences like movie tickets, food delivery, and collectibles. It’s essentially a modern version of the old “lipstick index,” where consumers still seek small emotional rewards during periods of financial strain (what is the lipstick index?).

Pharmaceutical giant Eli Lilly announced that its experimental obesity drug, retatrutide, produced the largest weight loss results ever recorded in a clinical trial, according to late-stage data posted last week.

The not-yet-peer-reviewed study of more than 2,300 adults with obesity suggests retatrutide blows past other GLP-1 weight-loss drugs by a mile:

However, there is a downside: Roughly 11% of people on the highest dose dropped out because of stomach-related side effects, and some earlier trial participants even stopped taking the drug because they felt they were losing too much weight.

Looking ahead: As Eli Lilly is coming off strong earnings and fresh approval for a new weight-loss pill, Lilly says it may ask the FDA to approve retatrutide as soon as this year.

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