Vibecession

What Is a Vibecession?

A "vibecession" is a period when the public mood about the economy turns gloomy—even though economic data doesn't show a traditional recession. It's not about GDP shrinking or job losses. Instead, it's about how people feel the economy is doing.

Coined by financial commentator Kyla Scanlon in 2022, the term blends "vibe" and "recession" to describe this strange disconnect. The economy might be growing, inflation might be falling, and jobs might be plentiful—but if people believe things are getting worse, they behave as if there's a downturn. That belief itself can have real consequences.

The Origin of the Term

During mid-2022, U.S. consumers faced high inflation, but unemployment was low and GDP was still growing. Despite this, public sentiment plunged. On social media, Scanlon responded to a question about the economy by saying the U.S. was in a "vibecession."

She later expanded on the idea in an essay titled "The Vibecession: The Self-Fulfilling Prophecy", arguing that public pessimism could actually lead to a real recession if it caused consumers to pull back on spending, delay major purchases, or reduce investment in businesses.

The term gained popularity on platforms like TikTok and Twitter, especially among younger audiences who felt traditional economic explanations didn't fully match their lived experiences. Since then, the idea has become more mainstream, referenced by analysts, journalists, and even government officials around the world.

The Data Doesn't Lie—Or Does It?

Yet despite all this, consumer sentiment was bleak. According to the University of Michigan Consumer Sentiment Index, consumer confidence hit its lowest level on record in June 2022. Even as inflation cooled and jobs remained plentiful, public pessimism lingered.

Polls from outlets like CNBC and Gallup showed that many Americans believed the country was already in a recession—despite there being no data to support it.

Why Do the Vibes Feel So Bad?

1. Prices Are Still High

Even though inflation slowed, prices didn't return to pre-2020 levels. Groceries, gas, rent, and housing remain expensive. Consumers feel this every time they go to the store or pay their bills.

While year-over-year inflation may be lower, cumulative inflation has driven the cost of living significantly higher over the past three years. Incomes have not kept pace with the rising cost of essentials.

2. Pandemic Whiplash

People are still recovering emotionally and financially from the chaos of the pandemic. After losing jobs, dealing with lockdowns, adapting to remote work, and navigating sudden inflation, it's no surprise that public trust in the economy is fragile.

The pandemic era also introduced unusual economic trends, including stimulus payments, supply chain disruptions, and labor shortages. These created temporary boosts followed by a sharp return to normal—or a new normal that feels uncertain and volatile.

3. Media and Social Media Negativity

News headlines focus heavily on crises and bad news. Social media encourages outrage and fear, not optimism. According to the Brookings Institution, economic news has grown more negative in tone, even when reporting positive developments.

Platforms like Twitter and Facebook amplify stories that generate strong emotional reactions. A headline about layoffs or rising rent is far more likely to go viral than one about stable job growth or reduced inflation. As a result, many people perceive the economy through a lens of constant crisis.

4. Political Polarization

Partisan leanings shape economic perceptions. People often rate the economy based on whether their preferred party is in power. This can distort how they interpret real data.

Under President Biden, Democrats have been more likely to view the economy positively, while Republicans have been overwhelmingly negative. This divide mirrors trends under both the Obama and Trump administrations.

5. Structural Problems and Inequality

Housing affordability, healthcare costs, and wage stagnation are real concerns. Even if job numbers are strong, many families still feel they're falling behind. According to a LendingClub study, more than 60% of Americans live paycheck to paycheck—including many earning six figures.

Student debt, limited retirement savings, and the rising cost of childcare also weigh heavily on families. These structural issues create an ongoing sense of financial insecurity, even during periods of economic expansion.

The Role of Sentiment in the "Vibe Economy"

The vibecession is part of a broader shift: the rise of the vibe economy, where stories and feelings carry economic weight. A classic example is a bank run triggered not by fundamentals, but by fear. In 2023, Silicon Valley Bank collapsed in part due to panic spreading on social media.

As consumers, investors, and voters, we often act on emotion before logic. When millions of people feel anxious, they may cut spending, delay investments, or withdraw money—turning bad vibes into real economic consequences.

Behavioral economists have long studied the role of sentiment and expectations in shaping economic behavior. John Maynard Keynes called this "animal spirits"—the psychological forces that drive people to take economic risks or pull back in fear.

In the digital age, those forces are more visible and contagious than ever before.

Global Reach: Not Just a U.S. Problem

Canada

In November 2024, Finance Minister Chrystia Freeland used the term "vibecession" to describe Canada's economic mood. She introduced a temporary GST holiday to lift consumer spirits and combat rising pessimism.

United Kingdom & Europe

Across Europe, inflation and energy crises damaged consumer confidence. Even when conditions improved, public sentiment remained low. Economists observed the same pattern: a strong labor market, but weak public confidence.

Australia

Analysts warned that while Australia wasn't in a recession, "bad vibes" could cause a self-induced slowdown. Political leaders cautioned against ignoring how people felt, even when numbers looked healthy. Economic commentators warned of rising vulnerability to a vibe-driven downturn.

Is It Just a Spin Game?

Not everyone agrees that "vibecession" is a helpful term. Critics say it risks downplaying real pain. High grocery bills, housing shortages, and student debt are not just "vibes"—they're concrete challenges.

Ben Wright at The Telegraph argues that the term can sound condescending. Others warn that it gives politicians an excuse to ignore structural problems in favor of PR campaigns.

Some economists argue that the solution isn't better branding—it's better results. If families see real improvements in affordability, healthcare access, and housing availability, the vibes will follow.

How to Rebuild the Vibes

What can governments, media, and institutions do to align perception with reality?

• Acknowledge Pain Honestly: Leaders need to recognize real financial pressures, not just celebrate statistics.
• Focus on Everyday Costs: Lowering housing, food, and childcare costs can have a huge emotional payoff.
• Rebuild Trust: Clear, consistent communication from government and media helps restore confidence.
• Measure What Matters: Economic indicators should include well-being, financial security, and access to essentials.
• Listen More: If people say they're hurting, believe them—even if the data looks fine.

The Logical Connection Between the Vibe Economy and the Vibecession

Although the terms arise from different contexts, they intersect in key ways:

Emotional Experience as Economic Driver

• Vibe Economy: emotions create value
• Vibecession: emotions suppress value
• Shared idea: feelings aren't secondary—they are the economy

Influence of AI and Narrative

• Vibe Economy uses AI to shape personal narratives and align with emotional signals
• Vibecession spreads through media algorithms and echo chambers
• Shared idea: the truth of the economy is shaped by the stories people tell

Collapse of Central Authority

• Vibe Economy empowers individuals to define value
• Vibecession reflects distrust in central institutions' narratives
• Shared idea: emotional consensus replaces institutional authority

Mood-First Behavior

• Vibe Economy: consumers act on identity and resonance
• Vibecession: consumers act on anxiety and disconnection
• Shared idea: behavior follows vibe, not data

Summary Comparison