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Vibecession

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The term was coined to describe public perception of the American economy during the presidency of Joe Biden.

Vibecession is a neologism that refers to a disconnect between the economy of a country and the general public's negative perception of it. The term was coined by Kyla Scanlon in a June 2022 newsletter about Americans' view of their economy.[1] It is a portmanteau of the words 'vibes' and 'recession'.[2][3]

Definition

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The United States is considered by some journalists to have entered a period of vibecession in early 2022, which continued throughout 2023 and was speculated by some to end around January 2024.[4][5][6][7][8] However, Americans' concerns about the economy shifted in 2024 to the job market.[9][10] 59% of adults surveyed by Affirm Holdings in June 2024 believed the country was in recession. On average, respondents pointed to March 2023 as the start of it.[11]

When polled, most Americans had a negative perception of the economy, with some saying that it had even entered a period of recession, while data showed that inflation was going down and GDP growing. This pessimism about the overall economy was found even among Americans who had a mostly positive perception of their own financial situation.[12] This alleged vibecession is believed to have been one of the major causes of President Joe Biden's decline in popularity around that time.[13]

The American vibecession was mostly blamed on the news media, specifically the market incentives that drive both traditional and alternative news outlets to focus on dramatic and negative news, such as some economists predicting a recession for 2023 that never came.[14] The public itself is also said to have negativity bias, in other words, people tend to choose to watch and read negative rather than positive news.[15]

Analysis and criticism

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Critics, such as Ben Wright and Ruchir Sharma, have called the term "condescending". In a March 2024 article for The Daily Telegraph, Wright felt the explanation for the discrepancy between the United States' economic performance and Americans' perceptions of it was obvious: inflation, price increases, and that Americans were saving less and racking up more debt. He described it as "absolutely no coincidence" that the percentage of voters positive about the economy's direction according to USA Today/Suffolk University polls fell to 9% in June 2022, the month after price increases peaked.[16] In a June 2024 article for the Financial Times, Sharma argued the "flaws in the economic system are real" and discussed generational inequality, with only a third of American adults reporting being better off than their parents, and the idea the economy is "rigged" against the average person. He wrote "normal people don't live for quarterly GDP numbers". While partisanship played a role, he felt it was not enough to explain registered independents and Democrats also reporting a negative outlook on the economy.[17]

However, both Wright and Sharma agreed Biden was not to blame for these phenomena, with Sharma attributing them to longer-term trends of growing inequality,[17] and Wright pointing out that Trump had inherited a favourable economy during his first term, while Biden had to navigate more challenging circumstances. Wright also believed Trump's economic policies for a potential second term, such as tariffs, "would clearly exacerbate the problem".[16]

Similar to Sharma's point, Cetera Financial Group's Gene Goldman and JP Morgan's Joyce Chang also attributed the disconnect to inequality. Goldman echoed that "Lower income households are not keeping up... Everything looks great but when you look beneath the surface, the disparity between the wealthy and nonwealthy is widening dramatically."[18]

Andrew Keshner of MarketWatch claimed the vibecession can be measured by the ability to save, pointing out that while inflation had cooled as of April 2024, Americans' personal savings rate remained "stubbornly low" at the time, indicative of what he described as a "complicated and sometimes contradictory" economic picture.[19]

Attempting to explain why consumer confidence had not recovered to pre-pandemic levels by June 2024, macro strategist Sonu Varghese and market analyst Tom Schneider suggested some further potential causes to US News in the housing market; sticker shock from price increases, with food prices being 20% higher and gas prices almost double what they were three years prior; and that part-time positions inflated the job market while full-time job growth was minimal. According to Schneider, the average consumer is not going to feel positive about the economy if they have to take on a second job.[2]

The number of Americans seeking jobs rose to 28.4% in July 2024, the highest since 2014, contributing to job anxieties.[9]

International usage

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Canada

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In November of 2024, Deputy Prime Minister Chrystia Freeland was ridiculed when she stated that the government's proposed temporary cut to the GST for certain goods is intended to combat Canada's "vibecession."[20]

References

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  1. ^ scanlon, kyla (2022-06-30). "The Vibecession: The Self-Fulfilling Prophecy". Kyla's Newsletter. Retrieved 2024-02-10.
  2. ^ a b Walrack, Jessica; Segal, Barri; Rajala, Liisa (2024-06-25). "What Is a 'Vibecession' and Are We in One?". US News & World Report. Retrieved 2024-09-17.
  3. ^ "What does vibecession mean and will it continue in 2024?". WhatIs. Retrieved 2024-09-17.
  4. ^ "We're Finally Shaking Off Those 'Vibecession' Feelings". Bloomberg.com. 2023-12-27. Retrieved 2024-02-10.
  5. ^ "The vibecession is fading—cooling inflation and rising wages have Americans feeling better about the economy in the new year". Fortune. Retrieved 2024-02-10.
  6. ^ Krugman, Paul (2024-01-23). "Opinion | Is the Vibecession Finally Coming to an End?". The New York Times. ISSN 0362-4331. Retrieved 2024-02-10.
  7. ^ Dickler, Jessica (2024-09-09). "The 'vibecession' is ending as the U.S. economy nails a soft landing, economists say". CNBC. Retrieved 2024-09-17.
  8. ^ Carter, Zachary D. "How Kamala Harris Defeated the Vibecession". www.msn.com. Retrieved 2024-09-17.
  9. ^ a b Quiroz-Gutierrez, Marco (20 August 2024). "The Stock Market Is Booming And The Economy Is Strong, But Job Anxiety Is Soaring". Fortune. Retrieved 26 September 2024.
  10. ^ Kaplan, Juliana (25 September 2024). "There's a new reason people feel bad about the economy". Business Insider. Retrieved 26 September 2024.
  11. ^ de Mott, Filip (23 July 2024). "Why a majority of Americans think the economy is already in a recession". Business Insider. Retrieved 26 September 2024.
  12. ^ Casselman, Ben; DePillis, Lydia (2022-07-15). "Voters See a Bad Economy, Even if They're Doing OK". The New York Times. ISSN 0362-4331. Retrieved 2024-02-10.
  13. ^ "It's the inflation, stupid: Why a 'vibecession' is hurting Biden - despite an economy which is the envy of Europe". Sky News. Retrieved 2024-06-10.
  14. ^ Sheidlower, Noah. "It's our fault you feel bad about the economy". Business Insider. Retrieved 2024-02-10.
  15. ^ "Two centuries of vibecessions". Financial Times. Retrieved 2024-02-10.
  16. ^ a b Wright, Ben (19 March 2024). "It's not the economy, it's inflation, stupid". The Daily Telegraph. Retrieved 26 September 2024.
  17. ^ a b Sharma, Ruchir (2 June 2024). "Biden's challenge runs deeper than 'bad vibes'". Financial Times. Retrieved 26 September 2024.
  18. ^ Dickler, Jessica (12 August 2024). "59% of Americans wrongly think the U.S. is in a recession, report finds". CNBC. Retrieved 26 September 2024.
  19. ^ Keshner, Andrew (1 June 2024). "Want to measure the 'vibebcession'? Start by looking at how much money Americans can save right now". MarketWatch. Retrieved 26 September 2024.
  20. ^ Al Mallees, Nojoud (25 November 2024). "Freeland says the two-month GST holiday is meant to tackle the 'vibecession'". CTV News. Retrieved 25 November 2024.
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