Originally coined by economics educator Kyla Scanlon in her June 2022 article “The Vibecession: The Self-Fulfilling Prophecy”, Scanlon described the term as “a period of temporary vibe-decline where economic data such as trade and industrial activity are relatively okayish.”
Even though, the risk of a full-blown recession is fading, we seem unable to shun that sinking feeling. Unfortunately, that negative perception can have a material effect on the economy, where anxious consumers caution their spending, and businesses raise prices in anticipation of the worst. The worry is that low consumer sentiment could plunge the economy into an actual recession.
Key economic indicators show that the economy is returning to growth, be it slowly, with forecasts showing the economy is likely to gather a bit of pace as 2024 goes on. While economists and policymakers may point to declining inflation as a sign of good economic health, it’s still no help to consumers continue to feel the sticky effects of price rises.
Data from the recent CNBC|SurveyMonkey ‘Your Money International Financial Security’ survey conducted amongst 4342 people in nine countries, showed that approximately 50% of adults are stressed about their personal finances in every country studied around the world, with inflation and rising prices still the main source of financial concern. Around half of adults the UK (51%) are concerned with price increases. Six in ten adults or more in the U.S., Australia, France and Germany share the same worries.
“The burden of inflation, debt, and minimal savings are creating the perfect storm for financial anxiety internationally. Understanding the current anxieties of adults around the world is critical for governments to boost confidence in the economy and better equip people for retirement” said Katie Miserany, senior vice president and chief communications officer at SurveyMonkey.
The poll also showed widespread pessimism about the next generation’s prospects, where most parents outside of the US, Mexico, and Singapore, think their children will be worse off financially. Notably, Singapore (60%) is the only country where the majority feel better off financially than their parents were at the same age. Germany and Spain report the lowest numbers, with just 28% of respondents feeling better off than their parents.
Nearly half of adults surveyed, identified as middle class reported living “paycheck to paycheck”. More than half of adults globally consider themselves to be part of the middle class, with the exception of those in the UK, where only 37% considered themselves to be middle income. European countries (except for the UK) have among the highest share of adults who identify as middle class, compared to only slightly more than half in the US (54%).
In terms of financial retirement planning, survey respondents indicated only about half of adults in the U.S. (47%), Australia (50%), and Germany (51%) felt they were on track or ahead of schedule with their retirement planning. Where government retirement support was expected, the data revealed a lack confidence in their government’s ability to do so. Respondent from France (34%) and Germany (35%) showed to have the least confidence in government retirement support, with Singapore (78%) being the most confident in this regard.
According to the respondents, financial security means no debt, home ownership and high levels of savings. Reportedly, adults in the U.S., Australia, the UK, and France indicated that frugal living is their path towards financial security, an indication of the lack of consumer confidence experienced to date. Respondents in Mexico, Singapore, and Spain indicated to believe in having a well-paying and steady job as being more important than focusing on their spending habits.
Sadly only 49% of the surveyed adults were optimistic, painting a stark picture. Mexico and Singapore stand out as particularly optimistic about their country’s outlook, with 74% and 79% of adults, respectively, saying they are optimistic about where their economy is headed.
Be it crisis fatigue, acknowledgment of the new norm of sticky high prices (despite lower inflation rates) and a media ecosystem projecting negative narratives about the economy, it’s proving difficult to shake gloomy consumer sentiment. For governments, across the world understanding the nuances of vibecession will be key to boost economic confidence. As seen in the survey results, personal financial security (perceptions) should be of concern as consumer sentiment can have tangible economic effects.
For reference, the CNBC|SurveyMonkey ‘Your Money International Financial Security’ Survey was conducted between the 18th – 24th of 2024 among a global sample 4,342 adults which included 498 in the U.S., 503 in Australia, 493 in France, 482 in Germany, 500 in Mexico, 482 in Singapore, 479 adults in Spain, 406 in Switzerland, and 499 in the UK.