Vibescession vs. Recession in 2024: What’s Really Happening In America’s Economy? 

If you (like us at HerMoney) are addicted to TikTok, you’ve probably heard the term “vibecession.” For anyone who isn’t chronically online, allow us to loop you in: The word refers to the phenomenon of feeling like we’re in a recession, even when the numbers say we aren’t. (A recession of the vibes, you might say.) While the term originally surfaced a few years ago to describe the pessimism people felt in a post-pandemic world, many people say the vibes are even worse now. A new Bankrate study found that 59% of adults feel like we’re already in a recession in 2024 — despite all the economic data saying otherwise. 

Our feelings aren’t entirely unfounded. Economists spent the majority of last year sounding alarm bells that we were definitely headed for a recession. But just as they turned a bit more optimistic, the American public has been confronted with unaffordable prices on everything from food to childcare, we’ve got near-daily layoff announcements dominating our LinkedIn feeds, and one look at Zillow reveals distinctly average homes selling for upwards of $2M. In other words, it’s easy to mistake our current economy for one that’s gone bust. But all of this begs the question: Why are we seeing such a wide gulf between the numbers in economic reports and the ones in our bank accounts?

YOUR Economy vs. THE Economy

It may be helpful to think about the concept of a vibecession as essentially a feedback loop, explains Financial therapist Amanda Clayman. We’ve all had to process a lot of negative information about the economy over the last couple years, which has made us understandably wary of its future. But the more we treat the threat of a recession in 2024 as fact rather than as products of our own financial anxiety, the more likely we are to see signs of it everywhere we look. 

“Right now, we are being bombarded with threat messaging from our environment, and that leads us to be in a physiologically defensive state where we are scanning for problems,” Clayman explains. “We say, ‘What’s making me feel this way?’ So we look around and find explanations.”

But as we’re trying to process the battle between our feelings and the strong economic indicators that chirp at us every time we turn on CNBC, it’s important to understand the difference between way most people think about money vs. how economic growth is actually measured. The truth is, most of us aren’t economists. That’s why relying too much on our own experience can lead us to make inaccurate predictions, explains Joanne Lam, Senior Vice President of Wealth Management at Freedom Capital Management. “The disconnect between negative consumer sentiment and the likelihood of an actual near-term recession is largely due to people focusing more on their own personal economies, rather than the broader economy,” Lam explains. 

Think about it this way: The technical definition of a recession is a multi-quarter downturn in gross domestic product (GDP) — which we’re not currently experiencing. Yet, what we see every single time we shop is that groceries cost 23.5% more than they did in 2019. We also see that over the same four-year period, gas costs 52% more, new cars cost 26% more, and mortgage rates are near a 20-year high. 

In other words, seeing your day-to-day expenses double sticks with you far more than, say, the news of a corporation’s positive quarterly earnings report — especially if you’re one of the nearly two thirds of Americans living paycheck-to-paycheck and struggling to make end’s meet. Ultimately, humans are unlikely to assume our economic worries or budget stressors are one-offs that can be dismissed, no matter how close the market may be to record stock growth for the year. And the thinner our budgets get stretched, the more we crave a real explanation. 

“We need a story to tell ourselves that explains what’s happening,” Clayman adds. “I think that that’s where the narratives around the vibecession are coming from: To try to explain that gap between our experienced discomfort and the message from our environment.”

But Inflation Is Down… Kind Of

Compared to the 9.1% inflation we saw two years ago, January’s rate of 3.1% doesn’t seem that bad. But wages haven‘t caught up. “People are feeling really squeezed,” Clayman says. “There’s a sense of loss, like an erosion of purchasing power.” So even if you’re earning more, you’ve likely noticed that notice that shrinkflation came for your favorite cereal (RIP to the 19.1oz boxes of Cinnamon Toast Crunch) or that your favorite hand soap now features a smaller bottle for the exact same price. 

After years of record inflation, many consumers have been waiting for prices to head back down, but experts advise being careful what you wish for — a sharp drop in prices actually would signal a looming recession in 2024. (That’s because prices often drop when there’s a decrease in demand. And nothing cuts demand off like a switch quite like when consumers stop spending.) In other words, what we should all be hoping for is that the price of consumer goods levels out at the same time our paychecks catch up. 

When The Corporate Math Ain’t Mathing…

Last year was a big year for layoffs, and so far in 2024 things haven’t improved, though unemployment remains low. More than 140 big-name tech companies have laid off thousands, and other American corporate giants, including Nike, UPS, Morgan Stanley, Macy’s, Warner Music and Sports Illustrated have slashed their workforces. Yet, many of these companies (as noted by outraged employees on countless social media platforms) continued to shell out millions in executive salaries and bonuses to those at the helm. 

This mismatch — affectionately dubbed “corporate math” on TikTok — only adds frustration and resentment to the list of negative emotions that are fueling our country’s vibecession. Matt Lundquist, founder and clinical director of Tribeca Therapy, explains that what we’re seeing today may be many young adults’ first experience with a less-than-favorable labor market, which can make it feel extra jarring — particularly if you’re unable to find a job after graduation, or if you get laid off from one of your first jobs. “There was a period of time where workers felt like they were in a great spot, and people were considering changing jobs to upgrade their salary and get remote work benefits,” he says. “It was kind of a seller’s market.”

But fast-forward to 2024, and high-paying job openings are starting to fall. At the same time, many CEOs are issuing return-to-office mandates, which many skeptics view as a means of slashing staff without having to actually lay anyone off. Last year, approximately 42% of companies that issued return-to-office mandates experienced a higher level of attrition than expected, and when someone resigns, it’s one less person who needs a severance check. 

It’s worth noting that these changes have primarily affected white-collar workers, which are precisely the people most likely to post on LinkedIn or speak to a news outlet about their situation. But all that publicity only adds fuel to our collective feedback loop fire that we’re headed for a recession in 2024. 

So, What Can You Do About It?

First, take a deep breath and try to channel some positive thoughts. Whether or not we see a downturn in 2024 remains to be seen, but we shouldn’t let the way we feel make us panic. There’s no point worrying needlessly about a recession, but there are benefits to preparing for one. In other words, take that sense of impending doom and translate it into action, recession-proofing your finances. Here’s a rundown on some of the best ways to do that. 

Pick up a WFH-friendly side hustle. “In this age of enhanced digital capabilities, there’s more flexibility to work in the home during off-hours,” Lam says. Got graphic design skills? Brilliant, put them to work. What about freelance writing, selling stuff on etsy or ebay, virtual assisting, or consulting? Take a look at your skill set and see where you might be able to plug into a little extra work. Not only can this help you bring in more cash right now, a side gig can also help you feel more secure in an era of job uncertainty.

Update your resume. Start preparing for a possible job search before you get laid off and hit panic mode. “If you read the writing on the wall and it seems likely that you’re gonna get laid off, the most important thing is to take action,” Lundquist says. “Begin to freshen up your resume, spend some time on LinkedIn, and do some networking.” Even something as simple as adding your most recent accomplishments to your LinkedIn profile, and sending a friendly note to the people who are likely to be your references from past jobs, can be a great place to start. 

Get back to basics with your budget. We get it, everything is expensive… But are there places where you could save? For example, when was the last time you really took a look at all the recurring subscriptions you pay for every year? What about grocery shopping — could you be saving hundreds of dollars a year by switching stores, or brands? It’s time to take an in-depth look at your budget and see exactly what you have coming in and going out. One of the best ways to do that is with your own money coach — which is why we developed FinanceFixx, an 8-week financial coaching program that guides participants through the ultimate Money Makeover. If you’re ready to change your financial life, meet your coach and save an average of $1,500, sign up here! 

Be gentle with yourself. It’s all too easy to let financial fears take over your life, but for the sake of your mental health, learning to direct that energy into action is so important. “We can’t just meditate and manifest a good economy,” Clayman says. “But we can have some lightness, some resilience, some presence in how all of this is unfolding, and I think that that is our best chance for kind of feeling some peace and clarity about what our choices are.” 

READ MORE: 

• Which Stocks May Fare Best During A Recession? 
• What A Possible Recession Means For Your Portfolio 
• Why A Recession Shouldn’t Hold Back Your Career

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