There is an old saying, “Perception is reality,” which can be applied to our current experience with the economy. Several indicators suggest a robust economy, including economic growth, declining inflation, and a stable stock market. However, many people still feel the effects of the past couple of years, where their money hasn’t gone as far, and they don’t have confidence in the economy. This dichotomy has coined a new term, vibecession.
A mashup of the words’ vibe’ and ‘recession,’ a vibecession is a term used to describe a strengthening economy characterized by low unemployment and increasing real wages alongside continued low consumer sentiment, where people feel as though they are in an economic downturn. Even with inflation easing, high prices on utilities, groceries, housing, and dining, among other areas, consumers feel they are missing out on the economic recovery. These perceptions about the economy can have a tangible effect on real-world outcomes.
The past two years have operated in this environment. Consumer Confidence indices have shown that people’s expectations drive their behaviors. According to a recent article from Square, “So, in a vibecession, negative sentiment can become a self-fulfilling prophecy. Businesses might postpone investments, and consumers might cut back on spending — all based on a general sense of unease rather than concrete economic downturns.”
While consumer confidence shifted with the new administration, economic uncertainty remains concerning, particularly regarding immigration and tariff policies. While these policies play out, companies will remain hesitant about long-term investment decisions. This can impact hiring, revenue projections, and stock prices.
According to Square, one way to handle the Vibecession is to plan as though there was an actual recession. A key aspect of this is maintaining consistent communication with your customers and prospects. This is a good idea regardless of economic conditions, but it could provide a competitive advantage in this environment.
Understanding their needs, concerns, expectations, and challenges can open doors to new opportunities, foster trust, and enhance relationships that lead to increased word-of-mouth recommendations.
Another area to consider is operating efficiency and cash flow. Are there areas where this could be improved? Do you have a cash reserve to tap into? This is not to say that cuts should be made just to make them; instead, it is a good time to ensure that your company runs as efficiently as possible. For example, “What can be streamlined? Do you have any unnecessary spending that’s gone unnoticed? Can you leverage technology to improve efficiency? Think about things like payroll or accounting, where key processes can be automated with the right tools.”
This is also a time to assess your brand awareness. Too often, marketing expenditure is the first area to be cut during economic difficulty, even though numerous studies over the past century have shown that companies that invest in marketing during downturns are more profitable than their competitors during and after the downturn. If consumers don’t see your messaging, there is a good chance they won’t think of you when they are ready to purchase. What investments are you making to remain visible?
The article perfectly sums up the situation: “Whether we’re in a vibecession or not, the reality is that economic sentiment affects how people spend their money — and that impacts your business. While you can’t control the broader economic vibes, you can control how your business responds to them. Businesses that stay agile, maintain transparent communication with customers, and provide clear value tend to weather sentiment shifts best. Those that can adapt their offerings to meet evolving consumer priorities while maintaining quality and trust often find opportunities even when the vibes feel off. By understanding these dynamics, you can position your business to not just survive uncertain sentiment, but use it to gain a competitive edge.”
If you have questions about hiring needs in the current economic landscape, send us a note. Our team of executive recruiters has their finger on the pulse of economic challenges across roles and industries.