In this guest blog post, Natalie Gallagher, Principal Economist and Director of Economic Research at Board International, discusses how business leaders must stay ahead of external forces that shape their strategies and financial health, and how adapting to market shifts, technological advancements, and consumer behaviors is key to long-term success.
Has consumer sentiment been collapsing? According to the University of Michigan’s Consumer Sentiment Index, the answer is yes—despite a notable rebound in June. This index, widely regarded as a leading gauge of consumer attitudes and economic expectations fell by more than 30 percent from December 2024 to May 2025, as concerns over new tariffs, inflation, and recession risks intensified. While June saw the first meaningful improvement in months, consumer confidence is still historically weak, highlighting ongoing uncertainty about the economic outlook.
June’s rebound to 60.7 marked the first meaningful uptick in months, but sentiment remains well below historical norms and the 73-year average. However, this is just one example within a growing array of volatile and contradictory economic indicators. Taken together, these signals point to a broader paradigm shift from an era of relative economic stability and predictable forecasting to one characterized by persistent volatility, requiring a more proactive and adaptive approach to decision-making.
The recent divergence in sentiment defies historical crisis classifications and exposes systemic volatility, challenging policymakers and corporate leaders alike. While consumer pessimism dominates headlines, the deeper issue is the proliferation of contradictory economic data. This volatility calls for business leaders to move beyond traditional forecasting and adopt a prescriptive analytical framework—one that goes beyond prediction to provide specific, real-time recommendations.
Economic dissonance: navigating a landscape of conflicting data
The volatility observed in consumer sentiment is not an isolated incident; it reflects deeper systemic instability that is reshaping the fundamentals of our economy.
Consider ongoing irregularities in consumer spending: In Q1 2025, sentiment dropped sharply, unemployment expectations surged, and both credit charge-offs and serious delinquencies remained at post-2008 highs. Despite these warning signs, retail sales still grew 4.5 percent during the same period. The increase was partially driven by preemptive purchases of automobiles because of expected tariffs. However, broad-based growth across retail categories points to a deeper resilience in consumer behavior than the headline data suggests. This disconnects spending behavior from both consumer sentiment and financial health indicators. The widespread nature of the growth further suggests that the rise in spending is not solely because of tariff pressures.
Why old economic patterns no longer hold
For decades, businesses relied on stable correlations, such as:
- When unemployment increases, sentiment decreases.
- When sentiment decreases, sales decline.
- When unemployment expectations rise, consumers pull back on spending.
The post-pandemic economy has dismantled these reliable patterns, replacing predictability with inconsistency across major economic levers. Despite unemployment averaging 3.6 percent in 2022, consumer sentiment dropped sharply as households experienced the highest price pressures since 1981, all while spending remained robust.
More recently, despite sharply rising concerns about unemployment, households continued to increase their purchases across a wide range of categories in Q1 2025. This wasn’t limited to major one-time purchases, as might be expected during periods of inflation anxiety, especially with tariffs driving up prices on items like automobiles. This disconnect between expectations, sentiment, and spending behavior adds uncertainty around how consumers will respond to the newly implemented tariffs. Still, the evidence strongly indicates a negative impact on their real purchasing power, as inflation is expected to erode more of the gains from rising wages than previously anticipated. While income growth is not projected to turn negative, households will feel less of a boost to their purchasing power in the months ahead compared to a pre-tariff environment.
These contradictions aren’t just short-term anomalies. They reflect deeper, structural shifts within a fragmented economy. When consumer spending remains resilient over the years despite plunging sentiment, elevated inflation, and rising financial stress, the reliability of traditional top-down analysis is fundamentally undermined. In this environment, headline indicators often move out of sync, making it clear that traditional data analysis can no longer provide the clarity or foresight decision-makers need.
From data to decisions: prescriptive analytics in practice
Given the contradictions and volatility in the underlying data, organizations need more than descriptive analytics. They need actionable, data-based guidance. Descriptive analytics tells you what happened; predictive analytics estimates what might happen next, and prescriptive analytics recommends what to do about it. The economic inconsistencies we face today call for not only improved forecasting, but also a more adaptive approach to decision-making.
This is why prescriptive analytics is so critical in the current environment. Overreliance on headline metrics risks overlooking the nuances within the data, leading to costly errors. Instead, decision-makers must demand prescriptive insights that recommend real-time actions. As economic conditions continue to evolve, organizations must be prepared to pivot quickly, leveraging advanced analytics and scenario-based forecasting to navigate uncertainty and complexity with confidence.
What does this mean in practice?
Building a prescriptive insights framework requires the ability to adapt in real time as new information emerges, whether that information reflects a sudden shift in consumer sentiment, a supply chain disruption, or an unexpected policy development.
For business leaders, prescriptive analytics is most effective when it blends hard data, like sales and purchasing patterns, with softer inputs such as sentiment and expectations. It’s equally important to factor in how key demographic groups are faring and how they might respond under different scenarios.
This approach helps avoid overreliance on any single headline metric, especially in an environment where data can be mixed, inconsistent, or even contradictory. It also enables leaders to identify and capitalize on growth opportunities, even in the face of economic volatility.
Applying prescriptive analytics: a retail case study
Consider a retailer facing conflicting signals: robust, growing sales and, at the same time, deteriorating consumer sentiment. By leveraging prescriptive analytics, the retailer can respond more dynamically to this disconnect between behavior and sentiment.
For example, even if overall sentiment is declining, it may discover its core demographic in certain regions has elevated savings and feels prepared to weather short-term economic uncertainty. This insight could lead the retailer to optimize growth by reallocating inventory, refining pricing strategies in markets with heightened consumer anxiety, or redirecting marketing investments toward channels and regions that continue to demonstrate resilience, despite widespread uncertainty.
Agility as advantage: preparing your organization for uncertainty
The volatility in the economic data is not an anomaly, it’s an enduring feature that organizations need to treat as a constant. The era of “set and forget” forecasting has given way to a new paradigm: Business leaders must move from reaction to readiness—embedding prescriptive intelligence into every decision loop.
Volatility has become a defining feature of our business environment. The winners will be those who treat it not as a threat but as a core part of every decision.
How Board in Azure Marketplace delivers predictive planning
Board, the Enterprise Planning Platform in Azure Marketplace, natively integrates internal metrics with external economic intelligence through the Board Foresight and Board Signals products. This powerful combination delivers a truly holistic view of the drivers behind growth and competitive advantage.
Board runs exclusively on Microsoft Azure, which provides the optimal infrastructure for its predictive planning capabilities. When Board's comprehensive planning platform integrates with Azure SQL Server 2025's AI-ready enterprise database, organizations gain cloud capabilities to better manage, protect, and govern their data at scale across on-premises and cloud environments.
Azure data infrastructure allows Board's predictive planning to provide customers with access to the economic intelligence and consumer sentiment insights they need to make decisions. Board leverages the security, performance, and scalability of Azure to deliver what businesses need in today’s fluctuating economic climate.
Learn more about Board International and Board, the Enterprise Planning Platform, including how to request a personalized demo, in Azure Marketplace. For more information about how retailers are harnessing technology to optimize planning and retain customers, download our briefing, The Merchandise Planning Challenge, from Board International.
