John Rogers, Chairman and Co-CEO of Ariel Investments, warns of persistent divergence in the US economy, citing uneven consumer spending and elevated market volatility. His comments highlight growing risks for consumer discretionary stocks despite strong performance in tech leaders like Apple.
- Consumer discretionary spending rose 1.8% YoY among high-income households, declined 0.9% among lower-income groups
- Apple (AAPL) gained 22% in 2025, driven by iPhone 17 and AI services
- ^VIX averaged 18.4 in 2025, above its 15.5 long-term average
- Crude oil (CL=F) trading around $82 per barrel in early 2025
- Consumer discretionary sector underperformed S&P 500 by 4.6% YTD
- Nasdaq Composite up 12.3% YTD, reflecting tech outperformance
John Rogers, Chairman and Co-CEO of Ariel Investments, has voiced concern over the resilience of the US consumer, warning of a fragile recovery marked by deep economic polarization. Speaking in a recent market commentary, Rogers emphasized the ongoing 'K-shaped' recovery, where high-income households continue to spend aggressively while lower- and middle-income consumers face tighter budgets amid persistent inflation and rising debt levels. The divergence is reflected in key metrics: consumer discretionary spending grew 1.8% year-over-year in Q4 2025, but only among households earning over $150,000 annually. Meanwhile, spending among those earning less than $75,000 declined by 0.9% over the same period. This split has intensified pressure on retailers and cyclical sectors, even as technology giants like Apple (AAPL) continue to post record revenues, with the stock up 22% in 2025 driven by strong iPhone 17 and AI service adoption. Rogers also noted that the CBOE Volatility Index (^VIX) has averaged 18.4 since January 2025—above its long-term 15.5 average—indicating elevated investor anxiety over potential economic deceleration. Crude oil futures (CL=F) have fluctuated around $82 per barrel, adding to inflationary concerns, particularly for energy-dependent consumer sectors. Market participants are reevaluating sector allocations, with consumer discretionary stocks in the S&P 500 underperforming by 4.6% year-to-date, while the tech-heavy Nasdaq Composite has gained 12.3%. The divergence underscores a broader shift in investor sentiment, favoring capital preservation and high-quality growth over broad-based consumer exposure.