Repurposing the Vibecession

The original "vibecession" was about the risks of "vibe-ing" us into a recession... it's been repurposed into telling us we're stupid

Summary:

1. The idea of a "Vibecession," a term coined to describe a recession brought on by collective pessimism or a negative economic vibe, as opposed to traditional economic downturns gained traction during a period when Google searches for "Recession" spiked, aligning with the U.S.'s consecutive quarters of negative GDP growth in Q2 2022. Despite expectations of a recession, various factors like lower gasoline prices and government interventions (e.g., Biden releasing oil from the SPR, Social Security increases, and the Inflation Reduction Act) helped avoid a full-blown recession, leading to significant consumer spending and economic recovery.

2. While major indices like Nasdaq and S&P 500 recovered, the R2000 has experienced a prolonged downturn. The recent rally seems to be facing exhaustion.

3. Consumer sentiment remains pessimistically skewed despite improvements in inflation and unemployment. The analysis suggests that consumer sentiment is well-explained by factors like inflation and unemployment, but there's still a disconnect between economic data and public perception. Historically, these disconnects have occurred DURING recessions.

4. The dismissal of public concerns about the economy contributes to distrust in the system and fuel speculation in markets like Bitcoin and NFTs. This has implication for the political landscape, suggesting that upcoming elections and policy decisions (like those by the Biden administration and the Powell Fed) may not suffice to address the public's economic concerns, especially as expectations around unemployment shift.

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Top Comment

Robert Eden observes: At a meta level, I think traditional academic institutions are obsolete, ineffective and absurdly overpriced. Online education can be vastly superior to a teaching grad student who really does not care about students. Overlay wokeness and the distressing failure to teach people how to think means traditional college education is no more, maybe counterproductive. If employers want competency and skills, an Ivy League sheepskin may not be the ticket. Online education can be totally unbiased, so maybe merit can win over DEI again.

All of your points are valid, they just might not matter.

MWG: Robert, I absolutely agree. As one of my children noted to me, “Dad, if I want to learn something I use online tools like ChatGPT, YouTube or Wikipedia. The teachers are uninterested in really explaining anything. It’s performative and about credentials.” This is the point I’m making when I suggest that universities have shifted to an emphasis on “being from the right place” — effectively an eating club or fraternity more than a place of learning. If you want to show you came from Skull & Bones, you have to know the secret handshake (Woke language, appropriate signaling, etc).

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The Main Event

The rich person is wise in his own eyes, But the poor who has understanding sees through him. — Proverbs 28:11

One of the more common tropes is the “Vibecession,” a variant of the Louis C.K. lament that “Everything is perfect and nobody is happy.” For those on Twitter, this is closely associated with the account of @kylascanlon, who wrote on the topic in 2022. Her post was one of many similar pieces that emerged as Google searches for “Recession” hit levels that exceeded 2008 and 2020:

This search activity coincided with the first Q2 2022 GDP report, which provided a second consecutive quarter of negative GDP growth. The point of Kyla’s analysis, formally titled “The Vibecession: The Self-Fulfilling Prophecy” was to highlight that “we can will ourselves into a recession through animal spirits” and most at the time, myself included, expected a recession to ensue. The S&P 500 off 20% didn’t hurt either. Neither did a then 13% decline in bond aggregates. It was rough all over. Today, we generally accept that the summer of 2022 remains the only period of modern history with two consecutive quarters of negative GDP growth that was NOT designated a recession: