What is a Vibecession and How Do I Get Through It?
(3 Minute Read) – It may sound like the latest Urban Dictionary entry or Gen Z slang, but it’s actually an economics educator who coined the term “vibecession.” Kyla Scanlon first wrote about it in 2022, defining it as “a period of temporary vibe decline where economic data such as trade and industrial activity are relatively okay-ish.” Essentially, we don’t feel like the economy is doing better, but on paper, it really is.
By definition, the U.S. is not in a recession. The traditional benchmark for a recession is two consecutive quarters of negative economic growth. The beginning of 2022 hit that mark, and that’s when the Federal Reserve started raising interest rates to slow inflation. Basically, the Fed’s theory is that raising interest rates lowers consumer demand, which in turn, should lower prices and inflation.
Those lower prices are not quite coming to fruition just yet. While wages have grown, the higher costs of groceries, insurance, and rent are eating into those higher paychecks. The U.S. Bureau of Labor Statistics reports consumer prices rose 3.2% from February 2023 to February 2024. Zillow reports rents rose 3.5% during the same period and a staggering 29.9% since the beginning of the pandemic. Talk about bad vibes.
Forecasters expected economic growth of 2.4% for the first three months of 2024. That’s just another indication that things are improving. Another indication: the U.S. Index of Consumer Sentiment (ICS). It tracks how Americans feel about the economy based on personal finances and business conditions. While the vibes haven’t bounced back all the way, the current ICS is at 79.40 (out of 100), up from 76.90 last month and up from 62.00 a year ago—a 28.06% increase.
Even as things are improving, many don’t feel it in their own financial situations. Here are a few tips to help you get through the vibecession:
1. Check your auto insurance policy – a recent report found full-coverage policies are up 26% over the past year, while overall inflation has hovered around 3%. The increases are usually obvious when it’s time for a policy renewal, so turn off your autopay and shop around.
2. Fight back with brand flexibility – store brands can save you 60% over name brands at the grocery store. Big brands are starting to notice, too! Associated Press reports:
Officials at the Federal Reserve, the nation’s primary inflation-fighting institution, have cited consumers’ growing reluctance to pay high prices as a key reason why they expect inflation to fall steadily back to their 2% annual target.
“Firms are telling us that price sensitivity is very much higher now,” Mary Daly, president of the Federal Reserve Bank of San Francisco and a member of the Fed’s interest-rate setting committee, said last week. “Consumers don’t want to purchase unless they’re seeing a 10% discount. … This is a serious improvement in the role that consumers play in bridling inflation.”
Associated Press, February 25, 2024
3. Log off social media – a New York Times survey found your TikTok and Instagram feeds are contributing to your bad vibes.
“Social media reflects — and is potentially fueling — a deep-seated angst about the economy that is showing up in surveys of younger consumers and political polls alike,’ the Times reported. “Young people are especially glum: A recent poll by The New York Times and Siena College found that 59% of voters under 30 rated the economy as ‘poor.'”
4. Know where to get help – if you’re having trouble affording food, heat, or rent, do not hesitate to reach out to a community resource. Visit this website to be connected to local resources.
However you feel about the economy is your reality. We have some resources to help ease those bad vibes and empower you throughout your financial journey. Check out our financial wellbeing page, give our financial calculators a whirl, or even see if a Unitus Equity Line Plus makes more sense than your high-interest credit cards. We’ll get through this together, no matter the current vibe.