We were wrong about the economy. But also right?

Finally, a reasonable explanation for the "vibecession."

Rehashing economic sentiment may seem pithy at this point in time, but I think it’s important to get our bearings before the geniuses in charge plumb the depths in the months and years to come. And it’s coming.

With that in mind, the overall public perception of the economy has left me and many others flummoxed over the past couple of years. You’ve heard it all before, and I’ve written about it before: Americans feel that the economy was bad, when all the data and indicators seem to say otherwise. The stats were telling. Less than a year ago, almost 60% of Americans believed we were in a recession—and yet, we’ve been nowhere near a recession.

I’ve thought a lot about this. I’ve tried to make sense of it. I’ve seen a bad recession. Most of you have, too, unless you’re 15 years old. I don’t think you could honestly look around in recent years and think, “yeah, the economy is in tatters.” 

But you can see it in the economic sentiment measures. Things bottomed out in July 2022:

This may be what sunk Biden. And possibly Kamala Harris. Trump basically ran the same play he did in 2016—“the economy is bad, I can fix it, American carnage,” and so on—even though it wasn’t true then, and it isn’t now. I’d argue that we’re in a much, much more perilous position now than we were even a few months ago, let alone three years ago.

That said, I did come across some reporting that has helped this all make a bit more sense to me this past week. Let’s be clear, again: I think we’re about to get a dose of reality as it comes to recessions. I think the first go-around, Trump mismanaged the economy, which was a big reason we experienced inflation in recent years—some might disagree with me on that, but who cuts interest rates when things are chugging along, and cuts taxes when the country actually needs to raise revenue? It didn’t make any sense.

Regardless, the piece I am referencing was published earlier this month in “The New York Times,” and if I were to summarize it as best I can, I’d say this: The economy is doing really well, but it’s come at the expense of pretty much everything else. That, I agree with. At least, I would say that I agreed with it up until the past month or so—because I really don’t know where things stand as of writing. 

The story analyzes a host of data and indicators, showing that the U.S. economy has outperformed every other in its class since 1990. Again, that seems to track, if I were to just use what I know off of the top of my head. Again, though, there’s the catch: That performance has come at a cost: 

“But by many other measures of well-being — especially health and happiness — the U.S. fares worse than many other rich countries and has fallen further behind since the 1990s.”

Give and take

The takeaway itself is derived from a sort of “report card” called the State of the Nation Project, which was released in early February by a group of economic scholars. And again, to reiterate, the main takeaway is that we’ve managed to become an economic juggernaut by grinding the American people into dust—the cost was the well-being and living standards of many Americans. Not everyone, of course, but it’s clear that many people aren’t sharing in the growing prosperity, and are frustrated by it.

As such, economic unrest and insecurity are rife. We simply don’t focus on, or make a priority of promoting the health and happiness of our citizens. Instead, we focus on the numbers at any cost: Make those lines go up and to the right, no matter what. While it may be a bit too simplified (I think you should click through and read the Report Card and the corresponding NYT report!), here are a few charts that may put things into perspective.

To get this: 

We’ve had to accept this:

And, as the report sums it all up, “our rising incomes are not translating into greater perceived well-being and social relations.” That, in my mind, is the most important piece of the puzzle. We bought in, we made the sacrifice, and the payoff isn’t what we were expecting or hoping for. 

Here’s the takeaway, in more detail, from the report: 

“Our measures of perceived well-being, especially in life satisfaction and mental health, are all going in the wrong direction, even as our material well-being continues to rise. Research has generally suggested that “money buys happiness,” at least to some degree, but our trends on these measures are moving in opposite directions. We also see declines in our relationships with others, including social isolation and half of the trust measures. Given the importance of social relationships in our lives, these two trends are probably related.

One possible general explanation is that rising income is still improving our perceived well-being, but other factors are acting more powerfully to offset this and make us feel worse off. Another possibility is that the way in which we are pursuing material wealth is directly reducing psychological and social well-being. We encourage future investigation about the possible explanations.”

Vibecessionists weren’t completely wrong

I don’t know if there’s a solution to all of this—if there isn’t, it certainly isn’t an easy one—but it does make sense to me. And I think, as mentioned, that this is what’s at the root of all the dissatisfaction with the status quo. So, as it relates to recent economic sentiment, I do think that people have been wrong. The economy has been strong. But they’ve also been correct in that things…aren’t that great. It’s just that the rosy data outshines the rest of it. And that rosy data is what we’ve chosen to pay attention to.

To bring it all back: The “vibecession” wasn’t completely off base. But I fear that our recent choices are going to bring us much closer to actual economic pain than most people were hoping for.

Remember: You can reach me at sammbecker@gmail.com with your thoughts, insults, or anything else.

Remain ever vigilant!