As year ends, Americans weigh in on cost of living, Trump, expectations for 2026 in CBS News poll

A CBS News/YouGov national poll of 2,300 U.S. adults (Dec. 17-19, 2025; ±2.5 points) finds widespread public pessimism about the cost of living, with many rating housing and health care as difficult to afford and most Americans saying the U.S. is expensive to live in. Fewer than one in five respondents said President Trump’s policies made them financially better in 2025, two-thirds view him as favoring the wealthy, and a majority believe AI will reduce jobs while preferring government restrictions — findings that heighten political and policy risk for sectors exposed to health-care reform, drug pricing, housing, and tech. These attitudes suggest constrained consumer demand and continued political scrutiny of policy actions heading into 2026, which could selectively pressure equities in health care, housing-related names, and parts of the tech complex.

Analysis

Market structure: Rising consumer concern about basics (housing, health care) tips structural demand toward rental housing, insurers/PBMs and defensive staples while compressing discretionary and homebuilder pricing power. Expect apartment REITs (EQR, AVB) and large insurers (UNH, HUM) to gain margin leverage from ACA credit stability and higher enrollment; homebuilders (DHI, LEN) and discretionary retailers (XLY components) face demand erosion and inventory markdown risk. Tech/AI winners (NVDA, MSFT) retain capital-market dominance but face political/regulatory pushback that will concentrate returns in mega-caps rather than broad cap-weighted indices.

Risk assessment: Tail risks include abrupt tariff escalations (raises input inflation 200–500bp sectorally), aggressive federal drug-price reform (earnings hit for pharma >15% on announcement), and AI regulation that could curtail licensing revenue for software apps. Time horizons: immediate (days–weeks) reaction to policy statements/CPI; short-term (1–3 months) earnings/Fed repricing; long-term (3–18 months) structural shifts in housing affordability and health policy. Hidden dependencies: deportation-driven labor shortages could increase wage inflation in hospitality/food, offsetting disinflation elsewhere. Key catalysts: next two CPI prints, Fed guidance, drug-pricing legislation and major AI policy moves — watch 30–90 day windows.

Trade implications: Tactical portfolio: long UNH (2–3% NAV) with 6–12 month target +12% and stop-loss -8%; short XHB (2% NAV) or DHI/LEN for 3–6 months targeting -15% if mortgage applications and builder sentiment decline; buy 3–6 month NVDA calls (size 1–2% NAV) to capture AI earnings re-rating, hedge with 30–60 day OTM puts on XLY for consumer downside. Fixed income/FX: establish 2–4% long TLT if 10y <4.00% (exit if 10y >4.25%); prefer USD long via UUP in risk-off scenarios. Monitor position pain thresholds and liquidity for REITs and single-name shorts.

Contrarian angles: The market may underprice sustained rental demand — short homebuilders vs long apartment REITs is asymmetric (builders priced for collapse; rents can rise 3–7% annually). Public skepticism of AI could be overdone vs revenue concentration: favor mega-cap AI exposure (NVDA, MSFT) over small-cap AI names where regulatory/legal drag is higher. Beware that early drug-pricing deals could curtail pharma buybacks and trigger multiple compression; avoid crowded large-cap pharma longs until legislative clarity (30–90 day window).

Key Decisions for Investors

• Establish a 2–3% NAV long position in UnitedHealth Group (UNH) within 2–6 weeks to play likely ACA-credit-driven enrollment lift; target +12% in 6–12 months, set stop-loss at -8%, reassess if Congressional drug-pricing bill advances.
• Initiate a 2% NAV short on XHB (Homebuilder ETF) or pair short DHI/LEN within 1 month to capture expected softening in homebuying; target -15% in 3–6 months, cut if XHB rallies >10% from entry or mortgage applications rebound.
• Buy 1–2% NAV of NVDA 3–6 month calls (or equivalent call spread) to capture continuing AI concentration; hedge portfolio downside with 30–60 day OTM puts on XLY sized at 0.5–1% NAV. Close/on-review post next earnings if guidance misses.
• Allocate 2–4% NAV to long-duration Treasuries (TLT) if 10y yield <4.00% to capitalize on risk-off re-pricing; liquidate if 10y >4.25% or CPI prints >0.5% month-over-month two prints in a row.
• Long apartment REIT exposure (EQR, AVB) 1–2% each, short consumer discretionary basket (select XLY names) 1–2% as a pair trade over 6–12 months; monitor rent CPI and unemployment—reduce REITs if effective rent growth <0% for two consecutive quarters.