I have a new piece up at Discourse taking on the new concept of the “vibecession,” which I describe as “kind of like an actual recession, except that it’s just in everybody’s heads.”
I had been seeing a lot of people talk about a “vibecession,” so I started to look into it, and it turns out this is an honest-to-goodness thing that is actually happening. Here is how I lay out the facts.
The actual economy is doing surprisingly well. Economic growth in the third quarter of 2023 reached a smashing 4.9% annualized rate. Inflation is significantly down from its post-pandemic spike and within sight of returning to its relatively low, long-term normal. Unemployment is at historic lows. Employment growth has been slowing down, but only because so many people are already working that there are not many unemployed left to be hired. Debt-to-income ratios are relatively low. The stock market is up. And so on.
And if we look at how people are behaving, they act as if they are prospering: Consumer spending is strong and rising, having recovered very sharply after the pandemic. People have been declaring how terrible the economy is while standing in front of hundreds of dollars’ worth of gifts piled under the Christmas tree
But if you ask people in words how the economy is going, they will tell you it’s terrible. According to an October 2023 Associated Press poll, “about three-quarters of [poll] respondents described the economy as poor.” Not for the first time, what people are saying is different from what they’re doing.
That’s the “vibecession.” It’s a recession that can’t be found in the economic data and can only be found in the vibes.
See the graphic at the top of this post, which is from a Financial Times report that I link to.
I go on to examine a number of explanations. There is negative partisanship: Republicans don’t want to admit the economy might be good under their hated rival—and unfortunately for President Biden, the “progressive” left doesn’t want to admit it, either. Then there is the meme-ification of the entire economy. And there is the general weirdness of the covid years. The pandemic may be over, but it has a long psychological overhang.
(On a more positive note, I put forward the theory that this is also what’s driving some of our current growth. Global supply chains got smashed to pieces in 2020, and now we’re putting them all back together again and optimizing them to a new normal. That process will take years, and there will be a lot of ongoing benefits as everything gets put back together.)
But then I offer one explanation I haven’t heard anywhere else—but tell me it doesn’t make a lot of sense the moment you hear it.
The initial response to the pandemic was massive government “stimulus” and subsidies that were quite clearly and explicitly intended to shield Americans from the reality of the pandemic. While the economy was fundamentally disrupted and unemployment skyrocketed, these were intended to make us feel safe and secure and as if we were not in a state of acute economic distress—which we actually were….
[P]eople do not see the last two years as a steady climb upward out of a pandemic-induced recession, because they were encouraged not to feel the effects of the 2020 contraction. As I warned at the time, the stimulus merely put off pain that would then have to be spread out over a longer period, particularly in the form of future inflation. We’re just finishing up paying for it, and that has a long psychological overhang.
Disconnecting our mood and attitude from the underlying economic reality was the deliberate aim of almost two years of government policy. And now we’re baffled that we succeeded too well.
2024: Boredom vs. Terror
A few weeks ago, Discourse also asked me for my most surprising prediction for 2024. Last Sunday, they posted the answers from me and their other authors.
Here’s part of what I wrote. (Follow the link for the rest.)
The most surprising result for what happens in 2024 would be: nothing. This could be, against all expectations, a boring and unexceptional year—and I say this against my professional interests.
I think people are underestimating the likelihood that voters in November will heave a resigned sigh, shrug their shoulders, and vote for Joe Biden, quietly putting to rest Donald Trump’s plans for “retribution.” This is likely even if Trump makes it on the ballot, a possibility most people are over-estimating….
In short, 2024 could end up being the most surprising thing of all: a status quo year.
A boring year could be assured relatively soon, since the Supreme Court has agreed to take up the case for removing Trump from ballots under Section 3 of the 14th Amendment, a case that more and more legal scholars and commentators are lining up to support. (See two good recent pieces from David French and Andy Craig.)
You might say that there will be turmoil if Trump is barred from ballot—but I think it will be much less than we fear. His supporters will wail and squawk, and we will hear about this for decades, the same way you still hear from some Democrats about the Bush v. Gore decision in the 2000 election. They will threaten a second Civil War but not really do much in the end, because they simply don’t have enough public support—and because the continuing dragnet of January 6 prosecutions has already scooped up the people most likely to commit acts of organized violence.
(And this is still going on. While I was up in the Minneapolis area over the holidays, I saw news of a local man recently arrested for breaking into the Capitol that day. And yes—because you will hear right-wing talking points to the contrary—hundreds of people have also been arrested and charged in the 2020 race riots. If you engage in any kind of politically motivated violence, there is a high chance our system will eventually catch up with you.)
The Republican establishment will complain bitterly in public, heave a giant sigh of relief in private, and rally behind Nikki Haley. More on Haley later, but let’s just say that she is mostly harmless, and this will lower the stakes of the election a good deal. But the Trump voters won’t show up for her, and while Joe Biden is an unpopular president, a lot of people will resign themselves to the idea that the alternatives are worse—something that is even more likely to happen if Trump remains on the ballot.
So I think there is a high chance that this year will be notable for the exciting things that don’t happen. But here’s the thing: The potential variance in results is about as high as you could imagine.
Think of this from Donald Trump’s perspective. By the beginning of 2025, he could be heading into another term as president of the wealthiest and most powerful nation in history, where he will have a good chance of making the civil and criminal cases against him go away and—if his lawyer is to be believed—he will possess the power to order military commandos to assassinate his political rivals with impunity. (Yes, this is a real thing that was actually said. Follow the link to hear the audio.) Or Donald Trump could be on the losing end of multiple civil and criminal trials and on the verge of losing much of his fortune and going to jail. Those are the two extremes: absolute power or prison.
I think we also face a high variance in results—and that the best result is that the least exciting options are the ones that actually happen. That’s what I meant when I signed off my most recent sales pitch by saying that 2024 “has some very dramatic possibilities that I hope, with a lot of work on our part, will all fizzle out.”
One final note: I thought I might be going out on a limb when I centered my sales pitch around the need to get your news from a real human rather than an algorithm or AI-generated garbage. Then into my inbox came a sales pitch from a left-of-center publication, Talking Points Memo, touting the fact that “real carbon-based hominids” produce their articles, as opposed to an AI chatbot.
So that’s a real concern that is becoming ever more important in this fascinating modern age we live in.