Despite a thriving economy and robust labor market, many Americans express pessimism about their economic prospects. A phenomenon known as the ‘vibecession’ has emerged, where consumers are frustrated with the effort required to maintain their standard of living amidst increasing income inequality.
Despite a thriving economy and robust labor market, many Americans express pessimism about their economic prospects. To shed light on this phenomenon, researchers at Numerator analyzed spending habits and conducted surveys to understand what drives this sentiment.
A Disconnect Between Economic Indicators and Consumer Sentiment
Reports have consistently shown that Americans are skeptical about the state of the economy. However, when examining economic indicators such as retail sales and consumer spending, a different narrative emerges – one of resilience. This apparent paradox raises questions: if consumers are resilient, what fuels their anger?
An Examination of Spending Habits and Income Inequality
Researchers analyzed the spending habits of 150,000 customers from 2019 to 2024 and surveyed over 4,500 people to gain insight into this phenomenon. The findings reveal that, despite increased spending power, consumers are frustrated with the effort required to maintain their standard of living. Furthermore, a widening gap in spending habits between income brackets has exacerbated feelings of being left behind among lower-income individuals.
Income inequality refers to the unequal distribution of wealth and income among individuals or groups within a population.
It is measured by comparing the percentage of total income earned by the rich to that earned by the poor.
According to the 'World Bank' , in 2020, the top 10% of earners globally held 76% of total income, while the bottom 10% held just 1.2%.
In developed countries, such as the United States and the United Kingdom, the gap between the rich and the poor has widened significantly over the past few decades.
A Shift in Consumer Sentiment
While some attribute consumer anger to perceived economic decline, the data suggests that this sentiment is more complex. Consumers are not worse off today than before the pandemic; in fact, they are doing better. The strength of the labor market and consumer spending suggest a resilient American economy. However, the widening income gap and increased effort required for consumers to maintain their standard of living contribute to feelings of frustration and pessimism.
The ‘Vibecession‘ – A State of Mind
The term ‘vibecession‘ captures the essence of this phenomenon: a state of mind characterized by anger, frustration, and disillusionment with the economy. While economic indicators paint a picture of resilience, consumer sentiment reveals a more nuanced reality. By examining spending habits and income inequality, researchers have shed light on the complex factors driving American consumers’ pessimism.
Implications for Businesses and Policymakers
Understanding the ‘vibecession‘ has significant implications for businesses and policymakers. As consumers continue to navigate this economic landscape, companies must adapt to changing consumer preferences and needs. Policymakers can work to address income inequality and support policies that promote economic mobility. By acknowledging the complexities of consumer sentiment, we can better address the underlying issues driving the ‘vibecession.‘
