There is a growing disconnect between the performance of the economy and people's perception of it. While the economy may be showing signs of improvement, many Americans are still feeling pessimistic. Kyla Scanlon, author of 'In This Economy?' and coiner of the term 'vibecession,' joined TheStreet to explain this phenomenon.
Full transcript of the video below:
CONWAY GITTENS: You are famous for coining the term vibecession. What is a vibecession?
KYLA SCANLON: Yes, a vibe recession is a disconnect between consumer sentiment and economic data. That is, the idea that people feel worse about the economy than the economy would suggest. There are many reasons for that. Structural affordability is a big one. There are reasons why people feel bad: the housing crisis, elder care, child care costs. One could point to media headlines as one more reason for people to feel bad. But it's really just meant to dig a little deeper into why people feel bad. And then, of course, start a conversation about how they could feel better.
CONWAY GITTENS: So are we in a vibrational recession?
KYLA SCANLON: I think we've been in a vibration recession for a while now. The article was published about two years ago and I think it was worse then. Now the economy is showing signs of slowing down. The labor market has shown signs of weakness. Inflation is slowing down but it's still persistent in some places. GDP is weakening. But the funny thing about all this is that it's not that funny, but consumer sentiment has improved, so we're still in a kind of vibration recession, but not like before.
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CONWAY GITTENS: So why do we see such a disconnect between the realities of the economy and the realities of how people feel?
KYLA SCANLON: Well, you could – there are a lot of different reasons. I think you could say that maybe economic metrics aren't fully capturing how people are feeling. For example, is GDP actually a measure of happiness? Probably not, right? It's a measure of consumer spending and maybe spending is a measure of happiness. But I think there's a lot to be said about the numbers that we're using. And then I think we're also in a time of immense uncertainty and with that immense uncertainty is going to be accompanied by an element of pessimism and hopelessness. And so I think that plays a big role as well.
CONWAY GITTENS: So what is it that you think most people don't understand about the state of the economy right now?
KYLA SCANLON: I think the main thing that people don't understand about today's economy is something about the human experience, which makes it difficult for us to distinguish between the short term and the long term. So I think a lot of people want the problems we face to be solved right now, but the housing crisis has been brewing for decades. Inflation has been a problem for five or four years. The labor market is cyclical, so I think people want immediate solutions to problems that are going to take a long time to solve, and there's a lot of effort being made to solve them, but it takes time. And I think time is extremely expensive, right? Waiting is expensive, being patient is expensive, and being patient is also hard.
Related: Inflation distorts public perception of the economy
