We are just past the halfway point of 2024, and things aren’t feeling great economy-wise, despite the US economy reaching what the Atlantic recently termed “superstar status.” Kyla Scanlon coined the term “vibecession” to explain this disconnect. In her new book, “In This Economy? How Money & Markets Really Work,” she breaks down why what’s really going on in our economy feels at odds with what we’re experiencing in our day-to-day lives.
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By virtually every benchmark, the US economy is exceeding growth expectations. We’re also doing better than we thought we would be pre-pandemic, both in terms of GDP and the number of jobs out there. So why does it still feel so hard to buy a house right now? Why are our grocery bills still astronomical? Why does everything still feel so expensive?
Scanlon says that on the one hand, “our brains are biased towards negative information. Sentiment in media headlines has trended negatively and that means sentiment in the general population would trend negative as well.” On the other hand, she acknowledges that there are real reasons why people are feeling bad.
Kyla Scanlon says she wrote her new book, In This Economy, because she knows that the economy is personal. “Everyone has a personal inflation rate. Everyone has a personal experience with the labor market. Everyone has a personal experience with economic growth,” Scanlon says. “The problem with economic media is that we talk in terms of averages, we don’t talk to the anecdotes, so a lot of people can feel left behind by that.”
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Looking ahead to the next few months, Scanlon says there is a lot of uncertainty mostly due to the upcoming Presidential election. She interviewed Chicago Fed President Austin Goolsbee about the soft landing, and while he says that there’s still the opportunity for what he calls a “golden path,” Scanlon has her doubts. “Things that are getting in the way is that two-thirds of inflation has been driven by shelter costs,” Scanlon says. “But if you look at real-time data, Zillow and Redfin rents are down on average. So we have this lag effect in the data that the Federal Reserve is looking at, which means that they could potentially overshoot on their tightening goal, and that could have consequences.”
As far as long-term solutions, Scanlon proposes a new radical outlook. She builds on Martin Gurri’s proposal for looking at our biggest societal issues with an “adventure mindset”. “I think if we can encourage more innovation, if we can encourage more risk-taking, that would be extremely useful for things like climate, for questions like how do we redesign our cities. It’s just thinking outside of the box, and giving people the tools that they need to imagine a world that’s better than the one that we live in,” Scanlon says.
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