Vibecession or recession? The debate continues as we explore the sentiments surrounding America's economy in 2024.

If you’ve been scrolling through TikTok, you might have come across the term “vibecession.” For those who aren’t on social media constantly, this term captures the sense of feeling like we’re in a recession, even when statistics suggest otherwise. It emerged a couple of years ago as a way to describe the unease many felt in a post-pandemic world, and recent discussions suggest that these feelings have intensified today. A recent Bankrate survey revealed that 59% of adults believe we’re already experiencing a recession in 2024, despite contrary economic indicators.

Our concerns aren’t baseless. Economists warned us throughout last year that we were definitely approaching a recession. However, as they began to express cautious optimism recently, many of us are faced with high prices for essentials like food and childcare, frequent layoffs on platforms like LinkedIn, and the staggering costs of average homes, which can go up to $2M. This creates a perception that our economy is in trouble. But why is there such a stark contrast between economic stats and what we see in our wallets?

Your Economy vs. The Economy

Understanding vibecession can be likened to experiencing a feedback loop, says financial therapist Amanda Clayman. Over the past couple of years, the flood of negative economic news has understandably made us anxious about the future. The more we treat the threat of a recession in 2024 as a fact rather than a reflection of our financial worries, the more we start seeing signs of it everywhere.

“We’re constantly bombarded with negative messages, which puts us in a defensive state, making us look for problems,” Clayman explains. “We ask ourselves, ‘What’s causing this feeling?’ and find reasons around us.”

As we navigate the conflict between our emotions and the favorable economic news, it's crucial to differentiate between how most people perceive money and how economic growth is genuinely assessed. Most of us aren’t trained economists, which is why leaning too heavily on personal experience can skew our understanding, according to Joanne Lam, Senior VP of Wealth Management at Freedom Capital Management. “The disconnect between negative consumer sentiment and the possibility of an actual recession is due to people concentrating more on their individual financial situations rather than the larger economic picture,” she explains.

Consider this: A recession is defined as a decline in gross domestic product (GDP) over several quarters — something we’re not experiencing now. However, when we shop, we see groceries costing 23.5% more than they did four years ago. Over that same period, gas prices have increased by 52%, new cars by 26%, and mortgage rates are at a 20-year high.

Seeing our daily expenses rise can be far more impactful than hearing about a company’s positive quarterly earnings — especially for the nearly two-thirds of Americans who live paycheck-to-paycheck. Ultimately, it’s tough to dismiss our financial anxieties, regardless of how close the market is to record stock growth for the year. As financial pressures mount, we seek a solid explanation.

“We crave narratives that can explain our experiences,” Clayman adds. “That’s where the idea of vibecession arises: to clarify the disconnection between our discomfort and the broader economic messages.”

Inflation Is Down… Sort Of

When comparing the 9.1% inflation rate from two years ago to January’s 3.1%, things look relatively better. But wages have not kept pace. “People are feeling really pinched,” Clayman says. “There’s a sense of loss in purchasing power.” Even if your salary has increased, you may have noticed shrinkflation affecting your favorite products, like your beloved cereal (goodbye, 19.1oz boxes of Cinnamon Toast Crunch) or the smaller container of hand soap for the same price.

After enduring high inflation rates, many consumers are hoping for price reductions, but experts caution against wishing too hard — a significant price drop could indicate an impending recession in 2024. This is because prices often fall when demand decreases, and nothing curtails demand like consumers cutting back on spending. Ideally, we want prices to stabilize while our incomes catch up.

When Corporate Math Doesn’t Add Up…

Last year witnessed a surge in layoffs, and 2024 has not shown much improvement, even with low unemployment rates. Over 140 major tech firms have let go of thousands, alongside other corporate giants like Nike, UPS, and Macy’s. Despite this, many of these companies (as expressed by frustrated employees across social media) continue to pay millions in executive compensation.

This discrepancy, humorously dubbed “corporate math” on TikTok, adds to the frustration felt nationwide and fuels the vibe of a vibecession. Matt Lundquist, founder and clinical director of Tribeca Therapy, notes that for many young adults, this might be their first encounter with a challenging job market, making it especially jarring if they face joblessness after graduation or layoffs early in their careers. “There was a time when workers felt secure and many were switching jobs for better pay and remote work options,” he explains. “It felt like a worker’s market.”

Fast forward to 2024, and high-paying job openings are decreasing. Meanwhile, numerous CEOs are enforcing return-to-office policies, which many suspect is a tactic to reduce staff without formal layoffs. Last year, about 42% of companies that implemented such mandates saw higher-than-expected employee attrition, meaning when someone resigns, it reduces the need for severance pay.

These shifts predominantly impact white-collar workers, who are likely to share their experiences on platforms like LinkedIn or with news outlets. This publicity only intensifies the collective sentiment that a recession may be on the horizon in 2024.

So, What Steps Can You Take?

First, breathe deeply and try to stay positive. The potential for an economic slowdown in 2024 remains uncertain, but letting fear dictate your mindset is counterproductive. It’s wise to prepare for a downturn without succumbing to panic. Here are some proactive steps you can take to recession-proof your finances:

Consider a WFH-friendly side gig. “In today’s digital age, there’s ample opportunity to earn extra income from home during flexible hours,” Lam points out. If you’re skilled in graphic design or writing, consider freelancing, selling items online, or offering virtual assistance. Evaluate your talents and see where you can add a little extra income, which can bolster your financial security in uncertain times.

Refresh your resume. Start gearing up for a job search before you face layoffs. “If you sense impending layoffs, take initiative,” Lundquist advises. “Update your resume, enhance your LinkedIn profile, and network.” Something as simple as adding recent achievements to your LinkedIn and reaching out to potential references can get you started.

Revisit your budget. We understand that everything is costly… But are there areas where you could cut back? Have you recently examined all your recurring subscriptions? When grocery shopping, could you be saving significantly by switching stores or brands? It’s essential to thoroughly analyze your budget to understand your inflow and outflow. One effective way to do this is with a financial coach — that’s why we created FinanceFixx, an 8-week program guiding participants through a comprehensive financial transformation. If you’re ready to change your financial life, meet your coach and save an average of $1,500!

Practice self-compassion. It’s easy to let financial fears consume your life, but for the sake of your mental health, channeling that energy into constructive action is vital. “We can’t just hope for a good economy through positive thinking,” Clayman states. “However, we can maintain a sense of resilience and presence in how we face these challenges, which may help us find clarity about our options.”