We’re Finally Shaking Off Those ‘Vibecession’ Feelings

The “vibecession” that has confounded economists for the past two years is finally behind us.

Recent shifts in the economic data, financial markets and consumer confidence signal an end to what my Bloomberg Opinion colleague Kyla Scanlon identified in mid-2022 as a “vibe decline” or “vibecession” that was immune to the apparent resilience of the economy. I made my own effort a little later to talk about why consumers were feeling so lousy despite a boom in jobs growth, focusing on stagnating wages and high inflation. With another 16 months of perspective, it’s clear that those weren’t the only factors. Fortunately, all the main culprits are now trending in the right direction.

The first and most discussed is inflation. I’ll use the headline Consumer Price Index since it encompasses the things consumers are most emotionally sensitive to, even if that’s not the measure the Federal Reserve uses to set monetary policy.

Food and energy prices are arguably the factors that politicians and the media emphasize most — ignoring their notorious volatility — because those costs hit households immediately. Since peak “vibecession” in June 2022, headline gains in CPI have fallen to 3.1% from 9.1%.

CPI all urban consumers

Food inflation is now back near 3%, year over year, after peaking at around 11% last year. The drop in the price of gasoline, which makes up 3.4% of the index, has been a major contributor to slowing headline inflation. Retail gasoline has fallen by almost 40% since June 2022, helped by record domestic oil production. The US is now pumping 1.3 million more barrels of oil per day than it did about 18 months back.

average gasoline prices