Grasping the vibecession
There’s an increasing gap between the economic performance and the public’s sentiment regarding the economy. Even as the economy presents indications of recovery, numerous Australians continue to feel negative about it. Kyla Scanlon, the writer of ‘In This Economy?’ and the originator of the term ‘vibecession’, discusses this occurrence with TheStreet.
CONWAY GITTENS: You’re well-known for introducing the term vibecession. What exactly is a vibecession?
KYLA SCANLON: A vibecession signifies a separation between consumer feelings and economic indicators. It embodies the notion that individuals perceive the economy more negatively than the actual data suggests. Various factors contribute to this sentiment. Structural affordability plays a significant role, with issues like the housing crisis, elder care, and childcare expenses affecting perceptions. Media coverage can also influence feelings negatively. Ultimately, the aim is to explore deeper reasons behind these sentiments and to initiate a dialogue on how individuals might feel more optimistic.
CONWAY GITTENS: Are we currently experiencing a vibecession?
KYLA SCANLON: Yes, I believe we’ve been in a vibecession for quite some time. The concept emerged roughly two years ago when conditions were worse. Presently, the economy is exhibiting signs of deceleration, with the labor market showing weaknesses. While inflation is tapering, it persists stubbornly in certain areas. GDP is on the decline. Interestingly, consumer sentiment has actually improved slightly; we remain in a vibecession, but it’s not as severe as it once was.
The gap between economic indicators and consumer perceptions
CONWAY GITTENS: What accounts for the notable disconnect between economic facts and public sentiment?
KYLA SCANLON: The reasons are multifaceted. It’s possible that economic indicators fail to fully encapsulate public sentiment. For instance, does GDP truly represent happiness? Likely not. It’s an indicator of consumer spending, which might reflect happiness, but there’s much to unpack regarding the metrics we utilize. Moreover, we are currently navigating a period of great uncertainty, which naturally breeds a sense of foreboding. This uncertainty contributes significantly to the overall mood.
CONWAY GITTENS: What do you think is the biggest misconception people have about the economy right now?
KYLA SCANLON: The primary misunderstanding is the human tendency to struggle with distinguishing between short-term and long-term perspectives. Many individuals seek immediate resolutions to the issues we’re currently facing, yet the housing crisis has taken decades to develop, and inflation has been persistent for several years. The labor market operates cyclically. People desire quick fixes for challenges that will require substantial time and effort to resolve. While there are significant initiatives underway, the process is time-consuming, and waiting can be costly. It can be challenging to remain patient.
Related: Inflation distorts public perception of economy
