Vibecessions, Part II

Good numbers, bad feelings. Why?

Source: Strength in Numbers

In October 2024, on the eve of the presidential election, the U.S. unemployment rate was 4.1 percent and the inflation rate was 2.6 percent. By historical standards, both these numbers were very good. And they were especially impressive given the pessimism of many economists two years earlier. In 2022 Larry Summers warned that it would take years of very high unemployment to get inflation down from its peak of 9 percent, while Bloomberg put the odds of recession at 100 percent. Instead by 2024 we had achieved the softest of soft landings.

Despite this stellar disinflation performance, the public mood was extremely sour. Voters who said that the economy was their most important issue favored Donald Trump by 60 percentage points in the 2024 presidential election, clearly costing Kamala Harris the election.

Almost a year later, in September 2025, the numbers were somewhat worse: Unemployment had ticked up to 4.4 percent while inflation had risen to 3 percent. In and of themselves, these aren’t terrible numbers. But this certainly isn’t, as Donald Trump claims, the best American economy in history. It isn’t a “hot” economy with prices going down.

Even given the gap between what Trump says about how wonderful the current economy is and the reality, however, it’s remarkable how pessimistic Americans are about the economy — significantly more negative than they were a year ago. The long-running Michigan Index of Consumer Sentiment is now lower than it was in the immediate aftermath of the 2008 financial crisis. The index is even lower than it was in 1980, when unemployment was above 7 percent and inflation hit 14 percent:

Source: University of Michigan

And voters now blame Trump for the perceived bad state of the economy, showing their anger at the ballot box: In the Virginia and New Jersey gubernatorial elections earlier this month, voters who prioritize the economy favored Democrats by 30 points — a 90 point swing.

Today’s post is the second in a series about “vibecessions”: periods when the economy, by standard economic measures, looks relatively decent but the general public holds very negative views. Last week’s primer showed that the performance of the U.S. economy during the Biden administration was, by objective measures, very impressive: America shrugged off the negative effects of the Covid pandemic on GDP and employment with remarkable speed, significantly outperforming other advanced countries.

During the Biden years, inflation did temporarily spike – which people hated even though their incomes were growing fast enough to keep up with inflation. But the anger persisted even as inflation fell dramatically, and continues under Trump.

Today I’ll try to make sense of Americans’ angry and unhappy vibe on the economy. Spoiler: I haven’t found a “unitary theory” of vibecessions. Rather, there appear to be several possible, and not mutually exclusive, explanations. I’ll discuss each of these in turn, along with their strengths and weaknesses. Lastly, I will discuss the special case of Donald Trump, and why he may be suffering an especially hostile reaction to the economy.

Beyond the paywall I’ll examine four possible explanations for the past few years of vibecession:

· Media negativity

· Extreme partisanship

· People care about the level of prices, not the inflation rate

· The economy is worse than it looks

· Negative feelings arising from Trump’s chaotic economic policies

In addition, I will make some conjectures about future sentiments regarding the economy and why Trump may be paying an additional “gaslighting” penalty.