Feeling better about the economy? The "vibecession" might be ending

While the economy might look strong on paper, the term "vibecession" captures something deeper: the emotional toll of financial uncertainty. 

A vibecession — a term coined by economic commentator Kyla Scanlon — refers to a disconnect between a country’s economy and the public's negative perception, or vibes, about it. At its core, vibecession isn’t about numbers or data; it’s a sentiment. It’s the collective feeling of unease or pessimism, even when official data suggests that the economy is, in reality, performing well.  

Vibecession may be behind us. According to a New York Federal Reserve survey, optimism about household finances hit a multiyear high following Donald Trump’s reelection in November. The survey showed that the share of households expecting a better financial situation in a year from now rose to its highest levels since 2020. And with the stock market charging ahead and inflation cooling down, it appears that the worst of the economic downturn may be over.

However, while data shows that vibecession may be fading and consumer sentiment is on the rise, Nick Seybert, associate professor at Robert H. Smith School of Business at the University of Maryland, believes the fundamentals underlying the vibecession will continue unless major policy shifts occur. “Some people are optimistic because a new set of politicians are taking over, but no obvious real changes are being made to education, childcare or housing," he said.

He considers the term “vibecession” to be an offensive oversimplification of how hard it has become to live as a young worker or a young family in the U.S., especially in major metropolitan areas. “Real policy failures have led to a disastrous living situation for anyone who has children or hopes to have children. So, of course, people feel badly about it,” he explained.

Dave Fortin, CFA and co-founder at Boston-based investing platform FutureMoney, agrees. “Though data shows we’re past peak vibecession, the picture isn’t rosy for everyone,” he said. “For the younger generation, home affordability is still a major issue that can cause people to delay major life milestones and have the feeling of being left behind.” 

Another point worth noting is that the vibecession is fading more noticeably among Republican voters. “Consumer sentiment is generally on the rise, but there is a large partisan gap — Republicans’ outlook of the economy dipped sharply right after the 2020 election, while Democrats’ rose,” said Wei Xiao, professor of economics at Binghamton University, State University of New York. “But this trend reversed immediately after the 2024 election.” 

Data from Reuters showed that consumer sentiment among Republicans went up by 15.5 points — the biggest increase since Trump’s 2016 win — while it dropped 10.1 points among Democrats.

So while the vibecession may be fading for some, deep-seated economic issues persist and the recovery is far from uniform, especially across political and socioeconomic groups. 

The younger generation's struggle

Politics aside, age also separates those who feel like we're still in a vibecession from those who don’t.

According to a Brookings Institution analysis, despite cooling inflation and a strong job market, many young people feel left behind due to growing student loan debt, unaffordability of homes and limited job opportunities. 

These issues hit younger generations much harder than older generations, who often have the safety net of home equity or retirement savings. For young people, it’s a different story. Many are postponing major milestones — like buying a house or starting a family — because financial stability feels so out of reach. For them, the disconnect between optimistic economic reports and real-life struggles is impossible to ignore.

What to do if you feel disconnected?

If you’re still feeling financially anxious despite the state of the economy, it’s best to limit your exposure to social media and news since they can often make you feel even worse about your finances. Instead, focus on what you can control. If you haven’t already, start a budget so you know exactly where your money is going each month. Then build an emergency fund, pay down debt and consider increasing your income through side hustles. When your finances are more stable, you’ll feel more secure regardless of the economic condition. 

Beyond taking control of your own finances, Seybert suggests that you advocate for systemic changes. “Protest and lobby your city, county, senators and congresspeople to stimulate housing supply, vote for politicians who support universal preschool or public childcare, and push to end government-subsidized college loans that contribute to rising tuition costs,” he said.