We Are In A Vibecession... Say What?
Things may be looking up for the economy but here's why many people still aren't optimistic.
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📰 Interesting financial news: Stay up to date on what’s happening in the economy.
📈 What’s popping in the stock market: The 411 on trending/interesting stock market news.
📝 This week’s main topic: What this newsletter’s title is about!
🥰 Team CGF’s Amazon favs: Affordable yet helpful Amazon finds.
📰 Interesting financial news
Student loan relief and payment cuts for many on hold after courts block parts of Biden’s SAVE plan. (Market Watch)
Nvidia, Chipotle…Are stock splits a good buy? (USA Today)
Social Security changes coming in May 2025. (Yahoo Finance)
Looks like the Federal Reserve won’t be cutting rates anytime soon. (Money)
📈 What’s popping in the stock market
Nvidia tops Microsoft and Apple as world's most valuable company. (Ticker Symbol: NVDA)
Nike set for weak quarterly sales growth as On, Hoka chip away market share. ((Ticker Symbol: NKE)
📝 Main topic: It’s not a recession it’s a “vibecession”
Many Americans have mixed feelings about the U.S. economy right now with inflation rising and falling over the past two years.
In 2023, the annual inflation rate was 4.1%. At the beginning of 2024, inflation fluctuated between 3.1% and 3.4% from January to April.
And although rates are lower than before, many people still feel less optimistic about the economy.
As a result, we have entered what is known as a vibecession.
What is a vibecession?
The term, vibecession, was coined by Kyla Scanlon, a content creator and economics educator, who wrote about the topic in her article "The Vibecession: The Self-Fulfilling Prophecy."
A vibecession is a term used to represent consumers' pessimistic outlook for the economy's future, although the data shows the economy is doing well.
When consumer outlook is low, people may feel anxious about the future, and cut back on spending. This in turn can slow economic growth, creating what feels like a recession, even if the economy hasn't technically entered one.
Essentially, the "vibe" or feeling of the economy is negative, leading to what feels like a recessionary period, hence the term "vibecession."
The impact of a vibecession on the economy
A vibecession can lead to less spending and investment, making an existing economic situation worse. It's like a cycle where bad vibes lead to more bad vibes. For instance:
People stop spending as much
As mentioned earlier, when people start feeling down or uncertain about the future, they usually cut back on spending, as is the case with this current vibecession. Since consumer spending is a big part of what keeps the economy moving, this slowdown can drag other key aspects of the economy down with it e.g. businesses!
Businesses slow down
If companies sense that people aren't buying as much, they might hold off on new projects, stop expanding, or even hire fewer people. They don't want to take risks when it looks like demand for their products or services is dropping. And a slow down in hiring impacts the economy overall.
People focus on saving more
When things feel shaky, folks tend to save more money just in case. While this is great for individual bank accounts, it means less money is being spent in the economy overall, which can slow the economy down even more.
Stock market shakiness
Additionally, when consumers feel uneasy, it often makes investors nervous too. If people are not buying from a company, investors might feel nervous to invest in it too! This can lead to more ups and downs in the stock market, affecting everyone's confidence and financial stability.
Government actions
In situation of economic decline, the government might step in with some help, changing interest rates (which we’ve seen a lot of recently) to try and boost economic activity.
Needless to say, consumers outlooks and vibecessions can create some weird economic times. To help you navigate through this current vibecession, here is some key advice:
Getting through a vibecession
No matter what is happening in the economy, safeguarding your money is always important. We’ve got some tips to help you do just that.
1. Diversify your portfolio
Diversifying your investments is one of the most effective ways to minimize risk and safeguard against inflation and loss. A well-rounded portfolio might include a mix of stocks, bonds, and tangible assets like commodities. However, it's important to remember that diversification does not guarantee returns. All investments carry the risk of volatility and the potential to lose value.
2. Invest in inflation-resistant stocks
While there are no inflation-proof stocks, some investments aren't as heavily affected by inflation. These stocks are known as inflation-resistant because they typically perform well or keep steady over time. Some examples include energy, utilities, healthcare, and natural gas. Additionally, before investing in a particular stock, be sure to do your research to see how well it has held up over time and navigated challenging economic times.
3. Maintain an emergency fund
Having an emergency fund where you can easily access cash during a difficult time can be helpful, no matter the state of the economy. So aim to have at least 3 to 6 months of your essential expenses saved i.e. food, housing, transportation, core utilites, medicines etc.
Here are some ways to quickly start your emergency fund:
Use an emergency fund calculator to help you determine how much to save
Build saving money into your budget
Opened a dedicated savings account
Automate your savings
Remember, an emergency fund can be your safety net in case of job loss, an accident, or any other emergency.
4. Evaluate your needs vs wants
When it comes to expenses, there are things we need to purchase, such as food and shelter, and then there are things we want to buy, such as a fancy new phone or a new bathing suit. However, financial security comes from balancing both needs and wants.
To help you reach this balance, evaluate your spending. Make sure you prioritize putting money towards your needs before spending money on your wants. Of course, never making purchases you want is no way to live. We suggest adjusting your budget to have more fun money and focus on saving money before you splurge.
5. Adopt a positive mindset
Adopting a positive mindset, even when the economy seems challenging, can make a world of difference. It's all about focusing on what you can control and finding the silver linings.
Instead of stressing over what you can't change, look for small ways to improve your situation, like cutting unnecessary expenses or finding creative side gigs. Stay optimistic and remind yourself that tough times don't last forever.
Keeping a positive outlook can help you stay motivated and resilient, making it easier to navigate through financial rough patches.
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While you may not be able to control the changes in the economy, one thing you can control is your financial education. With the proper knowledge, you can weather any economic storm and live a life of financial freedom. To help you build a solid financial future, check out our completely free investing courses today!
🥰 Team CGF’s Amazon Favs
Summer is a great time to host family and friends. If you have some events coming up, make sure you add these affordable items to your home décor to impress your guests.
1. Bamboo Charcuterie Board
If you're big on hosting, you know how popular the Charcuterie boards have become. This particular bamboo board is a great accessory to have in your kitchen. Its large surface allows you to create unique cheese, meat, and fruit designs. It is also lightweight and easy to carry around and share with guests. Additionally, it comes with a removable magnetic block set for conveniently cutting the cheese when needed.
2. Bamboo Appetizer Forks
While you may think that any wooden mini forks will do, you want to ensure that you get good quality and splinter-free ones. These bamboo appetizer forks pair well with a charcuterie board or many other moments of serving appetizers. And because they are made of 100% natural wood, they are environmentally friendly.
3. One Gallon Drink Dispenser
You'll want to get this high-quality one gallon drink dispenser to ensure your guests stay hydrated. It can be used for various beverages such as iced tea, lemonade, fruit and vegetable-infused drinks, and more. The stainless steel faucet design will ensure that you can use these dispensers for countless parties in the future.
4. Citronella Outdoor Candles
Do you know what can ruin a good outdoor party? Mosquitos. If you’re looking forward to hosting summer night parties in your backyard or relaxing outside without drenching yourself in bug spray, you should try out these lemongrass and citronella candles.
With a long burn time of 225 hours, you can enjoy an entire night outside pest-free. They’ll look great on your outdoor table tops as well!
5. Mesh Food Covers
Mosquitos aren’t the only bothersome bugs of summer. Flies, wasps, and ants are also creepy crawlers that can ruin a fun outdoor outing. This 3-pack set of mesh food covers will help you protect your food from unwanted pests while still allowing you to display your delicious appetizers to your guests. These covers are also reusable and collapsible for easy storage.
6. Utensil Caddy
If you’re looking for a way to stay organized in the kitchen or while hosting a party, then this utensil caddy is a must. It’s a great place to store utensils and plates. You can use it for the kitchen, barbecues, outdoor gatherings, and more.