Lately the vibes are off, economically speaking. Is it inflation? A recession? Or just bad vibes?
If the economy’s so good, why do we feel so bad? 84% of Canadians believe we’re in a recession right now and yet Canada's GDP actually outperformed expectations last year, unemployment is low and wages are increasing. There’s a disconnect between inflation rates and how we feel about inflation rates. Welcome to the vibecession.
Our guest, Kyla Scanlon, is the author of In This Economy? How Money & Markets Really Work. Kyla coined the term “vibecession” to capture the mismatch between objective economic indicators and people’s subjective feelings about the economy. We talk with her about the risks of believing the bad vibes, what TikTok has to do with our pessimistic mood, and why we’re still spending when we feel so broke. Kyla also writes a newsletter, is one of the co-hosts of Wealthsimple’s podcast TLDR and has her own podcast called Let's Appreciate.
Also, Vass and Katrina discuss mental breakdown TV.
This is Lately. Every week, we take a deep dive into the big, defining trends in business and tech that are reshaping our every day.
Our executive producer is Katrina Onstad. The show is produced by Andrea Varsany. Our sound designer is Cameron McIver.
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Find the transcript of today’s episode here.
We’d love to hear from you. Send your comments, questions or ideas to lately@globeandmail.com.
Vass Bednar [00:00:00] I'm Vass Bednar and I'm the host of this Globe and Mail podcast, Lately.
Katrina Onstad [00:00:04] And I'm Katrina Onstad, the show's executive producer. Vass how are you feeling? What are the vibes?
Vass Bednar [00:00:10] I want to be honest with you, and I have to say that the vibes are are pretty bad. They're a little bit off.
Katrina Onstad [00:00:17] Oh, no.
Vass Bednar [00:00:17] Not between you and I, what a relief.
Katrina Onstad [00:00:20] Okay, good.
Vass Bednar [00:00:21] But the vibe between everyday people and the economy, there just seems to be a persistent pessimism. And it's weird that we're pessimistic in the summer, because I think summer is kind of like a happy, fun time. So I don't know if you feel it, if you if you see it online or off?
Katrina Onstad [00:00:40] I know it's not- it's not very summery out there is it? And I have been blaming my cloudiness on just my general personality, and maybe because I've been watching too much of The Bear. Right? There is a lot of dark bad vibes TV out there right now. The Atlantic just wrote this piece, I don't know if you saw it, on the rise of "nervous breakdown television", and I'm taking in way too much of that. So I was already feeling a little bit unsteady. But then this holiday Monday, the stock market plummeted and that was pretty jarring. Like these bad vibes suddenly felt quite rational.
Vass Bednar [00:01:10] Absolutely. I mean, it was definitely jarring, as well as all the kind of noisy, freaked out commentary around it. I think combined with being on a holiday Monday for many of us.
Katrina Onstad [00:01:19] Yeah.
Vass Bednar [00:01:19] $6.5 trillion erased in a day. But we're recording this just two days later, and as of right now markets do seem to be recovering. A calm seems to be holding, but that nosedive kind of reinvigorated chatter that hasn't gone away for a while in Canada. Are we about to enter a recession? And what was interesting to me about that is that according to at least one poll already, tons of Canadians, 84%, believe that the economy is already in a recession. But the thing is, fact check, we're not! Canada's GDP outperformed expectations last year. Now, granted, those expectations were pretty low, some might even say rock bottom, but we outperformed them. And the economy seems to be heading for a soft landing. The rate of inflation is down and unemployment is getting close to pre-pandemic levels.
Katrina Onstad [00:02:13] Yes, unemployment may be at pre-pandemic levels, but not youth unemployment. Youth unemployment has been really, really high this summer.
Vass Bednar [00:02:20] Absolutely. And that totally sucks. And I don't mean to discount it, but still, overall, there is a disconnect between what the numbers are telling us and how people are feeling.
Katrina Onstad [00:02:28] Right.
Vass Bednar [00:02:30] I saw this summed up really nicely in a- in a throwaway tweet, because I think I'm extremely online sometimes in the worst ways. And someone said, "Never in human history have so many lives been in such safe, material prosperity. And yet somehow people hysterically think themselves on the brink of apocalyptic turmoil."
Katrina Onstad [00:02:50] Okay, but you read that on Twitter, which is the home of apocalyptic turmoil. But there is your first problem, because we do catch our bad vibes, don't we? By hanging out on social media, I think bad vibes can be contagious.
Vass Bednar [00:03:01] Oh my God, they're totally contagious. But you know what's not? Our grocery bills being so much higher than they used to be just a few years ago, and those prices don't come back down even as the rate of inflation slows. And that's painful. Canadian pollster Darrell Bricker said there is a disconnect between how we feel about inflation and the actual inflation rate because of the perceived cost of living. So because life is so much more expensive now, we call that feeling inflation.
Katrina Onstad [00:03:31] And then that can unleash a self-fulfilling prophecy, right? The danger is that if people feel bad, they start behaving badly. They begin to pull back, hiring less, spending less, and that can make the economy worse. And another fallout of misread vibes could be electoral outcomes, something we've been thinking about this week in the States obviously. Kamala Harris is for now benefiting from a bit of a vibe reset among Democrats and maybe many Americans. And in Canada, we have a prime minister with a very low approval rating and an election next year, in all likelihood. So if these vibes are askew and not representative of reality, how do we know what we're voting for or voting against?
Vass Bednar [00:04:13] It's hard to say, but moods matter. And that's why this week we are talking to the person who named this mismatch between fact and feeling, giving it the very catchy moniker "vibecession". Our guest is TikTok's trending economist, Kyla Scanlon. Kyla coined this awesome term to capture that disconnect between, you know, quote unquote, objective economic indicators and people's more subjective feelings about the economy. She's also the author of a new book that I've been recommending. It's called "In This Economy?" (emphasis on the question mark) "How Money and Markets Really Work." She's also one of the co-hosts of the Wealthsimple podcast Too Long Didn't Read, TLDR, so we're going to talk to her about the risk of believing the vibes and how the numbers may not quite capture them. This is Lately. Kyla, you were a car salesperson before moving into financial analysis. Were you any good at it?
Kyla Scanlon [00:05:24] Yeah, I was like, creepily good. Like I had no reason to be so good. Yeah, I was like the top salesperson one summer. So I sold 38 cars. And the biggest thing was just listening to people. Yeah. Being on the lot too, like, time on the lot really helps as well.
Vass Bednar [00:05:43] In 2022 you coined the term vibecession in The New York Times, noting that the vibes in the economy are weird. Really weird. You were speaking about the US specifically. Do you mind defining a vibecession for us?
Kyla Scanlon [00:05:58] Yeah, yeah. So a vibecession is a disconnect between consumer sentiment and economic data. And the general idea is that there is a big discrepancy between how an economy is performing, for the US you know, GDP was up, inflation was going down, the labor market was strong, and yet people were feeling tremendously awful. You know, people thought we were in a recession. They thought unemployment is at an all time high. And so the vibecession is really just a term meant to talk about why this discrepancy exists. But then also the concept recognizes the issues of structural affordability, right? Like housing crisis in both Canada and the US. Eldercare, childcare costs, as well as media, you know, being an issue for people in terms of how they consume the information about their lived environment.
Vass Bednar [00:06:48] I like weird as an official economics term. Was there a particular moment where you kind of felt like you were putting your- your finger on that term, or kind of bringing a nomenclature to that disconnect?
Kyla Scanlon [00:07:02] Yeah, it was something I thought a lot about, because one of the really useful things of social media is that you are kind of in the belly of the beast, right? Like every day, you know, producing a video or having people comment on it, you just get a lot of really interesting data. And so I was making these videos being like, look, everybody, GDP is going up. And I had a litany of comments being like, well, I don't feel good. Like I'm worried. And how can you think the economy is good when I don't? And I was just riding my bike one day and I was like, what is this? Like, what's going on? Why is this such a big issue? And this is before a lot of people started talking about it, like, I came up with the word on my bike, and it sort of has taken a life of its own since then. And I think it's been helpful for people to have a term to describe what's going on, because that just makes whatever's going on a little bit more concrete.
Vass Bednar [00:07:56] I want to talk more about what's going on. When you're surfing socials what are you noticing about how people are talking about the economy? It strikes me that people aren't talking about GDP.
Kyla Scanlon [00:08:07] Yeah. I mean, even, you know, Canada, I saw a tweet today with people saying that Canada is experiencing the worst economy ever, which, just really isn't true. When you look back at economic history, there's been very hard downturns to navigate. And what we're in right now is uncertain and it's scary, and we have had really high inflation. But that doesn't mean it's like the worst economy ever. And so I think that's kind of the thing with social media is that there is a tendency to overgeneralize. There's a tendency to be extreme, and that is because algorithms reward that sort of behavior. I always try to caveat these sorts of conversations with the idea that if people are not feeling good, that's probably true for them. And that's why the vibes are important. It's not a new concept to look at consumer sentiment. George Soros in Reflexivity is one example. John Maynard Keynes and animal spirits, another example. Human behavior is the root of the economy, and the vibcession and vibes in general is just meant to be like, hey you know, people are saying things that don't make sense, but maybe there's some validity behind that. And like, we should ask them why they feel the way that they do. So we can work on fixing it and also so we can address it just in case things do get worse, which is probably what's going to happen over the next few months.
Vass Bednar [00:09:33] You just mentioned economist John Maynard Keynes, and when he was writing about animal spirits, it was 1936, almost 100 years ago. I want to do my best to define it, a term used to describe the instincts, proclivities and emotion that seem to influence human behavior and then can be measured in terms of consumer confidence. I don't know if you want to do your kind of own spin, but what's the difference between, like, those animal spirits and the disconnect of the vibe session?
Kyla Scanlon [00:10:04] Yeah, I mean, I think for him, like animal spirits was what ultimately was fueling market cycles. And he was like, oh, people are going to just sort of follow the path. There's a lot of crowd following. People just can be influenced easily. And I think with the vibes, it's more of a conversation around sentiment about the economy. And then sentiment that is disconnected from action. So there's a big connect between what happens with animal spirits, you know, people acting on belief. But what's been interesting about consumer sentiment is that people are saying that they're feeling bad, but then they go and, in the US specifically, spend quite a bit of money. Retail sales are still up, you know, despite people saying that they're not feeling so good. And so that's a disconnect between action and behavior. And so that's one difference between the quote unquote vibes and then animal spirits.
Vass Bednar [00:11:07] So Canada's a little bit of a different beast than the US in that we haven't seen that surge in growth and productivity. We narrowly avoided, at least so far, the recession that was expected. We had real GDP rising by a mere 1.1% in 2023. We tried to get excited about that because it was over three times higher than was forecasted, right? 0.3% was forecasted. So get out your party hats here. These are still super, super small numbers. How do numbers like this influence our vibes and maybe what we see on social media?
Kyla Scanlon [00:11:42] Every country except for the US has had a much harder time, and that's why it's kind of odd that the US is in such a quote unquote vibe session. And I think for Canada, there's a lot of pressure points, like the housing crisis has really impacted you all. And I think that there's a lot of worries about that. I think there's been a lot of industry turnover as well. Like maybe not the job availability for younger people. Certain parts of Canada are dependent on industries that just don't, make as much money as they used to. And that's tough. Like it, that's tough to, to build an economy on. And so I think for Canada, the vibecession makes a little bit more sense because it's much more reflective of the actual economic data that's being produced. And that that's just how it is there.
Vass Bednar [00:12:29] Well, speaking of just how it is here, there's also a lot of stuff to be proud of, right? We are introducing a new childcare system. We have the initial start of pharmacare, we have subsidized dental care, and we have our public health system, which actually is sort of deteriorating, but something we've historically been very proud of. At the same time, a recent poll shows that only 23% of people in the country feel that we're even headed in the right direction. Why do you think the vibes are so bad?
Kyla Scanlon [00:13:03] I think a lot of it is political uncertainty. So like when you look at vibe charts, there's often a correlation between, you know, parties in the US, for example. So Republicans feel not good, because there's a Democrat in office. When there's a Republican in offices, Democrats tend to feel not good. And so there's definitely some correlation between that. And then just political sentiment. Political uncertainty is quite high, especially geopolitically, internationally. So I think that's one reason that people might be feeling bad, but then, you know, you're talking about, your healthcare system may be dwindling away. And I think that a lot of people are worried about the long term. You know, there's different policy proposals that are put into place to address things in the short term, and that's great. But I think a lot of people are looking out to the future and there's demographic imbalances and inflation has been really high, are the banks going to start to cut rates soon? Like there's all these questions that sort of bleed together the short and the long term, but it feels like there maybe isn't a plan for the long term. And I think that definitely impacts how people feel.
Vass Bednar [00:14:11] Well, social media knows no borders. Do you think we're kind of echoing the US with that political uncertainty?
Kyla Scanlon [00:14:18] I think that it's hard. The U.S exports everything, including, US sentiment. So I think it's impossible to escape. And that's a very perhaps American viewpoint, so I apologize, but that's just what I've heard from people who live outside the US. It's like you all never shut up. So. Yeah.
Vass Bednar [00:14:38] Well, I was going to make some kind of weird tariff joke, so I spared everyone that. Back to polls for a second. Another recent poll suggested that nearly 40% of new Canadians, so again, historically a point of pride in Canada, right, how we welcome newcomers, have said they're considering leaving their province of Ontario over high housing costs. What matters more to consumer sentiment and vibes? Is it just that people are considering making that move, or do they actually have to move for the needle to move?
Kyla Scanlon [00:15:11] I really believe in the housing theory of everything. And the housing theory of everything is this idea that how we feel about everything that we do is downstream of housing, right? So like if you have a walkable city, you're probably going to dress a little bit better, you're going to be a little bit healthier because you're not in your vehicle. So I think housing is sort of the root of a lot of the problems. And so I'm not surprised to hear a statistic saying that people are going to leave because housing is so expensive. It's like, of course. Housing is the root of how we interact with the economy. And I think in order for the vibes to shift, housing prices have to go down and you have to build more housing in order for that to happen. And that's difficult. And people can move. But housing is an issue everywhere unless you move somewhere incredibly rural. But a lot of people want to live in city centers and that just creates too much demand and not enough supply.
Vass Bednar [00:16:08] Well, speaking about how people feel and how they feel about their finances, I don't know if you've come across this term before. Money dysmorphia. Could you tell me about it?
Kyla Scanlon [00:16:18] Yeah. It's where people don't have a belief in how much money that they have. Right? Like they're looking around, they're like, oh, I can't afford this, I can't afford that. But really, their economic circumstances are better than they believe.
Vass Bednar [00:16:28] Yeah. You know, on paper, you have savings, right? Financially, certain elements are accessible to you. But you either feel that you can't splurge on that latte, or you have an overinflated sense of what your budget can be, or you're kind of keeping up with the Digital Joneses. So there's like, a dangerous kind of pendulum there. I've been noticing money dysmorphia quite a bit, particularly on TikTok. There are lots of videos I think, of Gen Z in particular, kind of airing their economic grievances, yeah, and anxieties in videos like this one. I want to play you one.
TikToker [00:17:02] And for those of you who don't know, Canada has like a serious f- inflation problem right now. I just got back from doing groceries, and I have $70 worth of groceries on my table right now, and I genuinely don't even know what I purchased that made it to $70. I had a f- mini breakdown to my parents the other week. I start, like, crying, like tears. I'm working like three jobs right now. Like I got out of university like last year in December, and I have been grinding it out ever since just because the cost of living. I was telling my parents, like, it's just so frustrating that like, you do all the right things, you go to university and then you come out, you get a job, whatever, and you can barely can f- afford rent. I talk about it with my friends all the time, but we're just sticking together right now because it's brutal out there.
Vass Bednar [00:17:45] So Kyla, I find this stuff interesting but kind of confusing too, right? On the one hand, a lot of these videos are appropriately pessimistic. There are complaints about the economy not feeling that people have enough or enough money left over. But on the other hand, sometimes those very same TikTokers will post about consumption and their haul videos. What do you make of this disconnect? And how does TikTok, as a as a medium, maybe shape the financial habits and attitudes of Gen Z?
Kyla Scanlon [00:18:17] Yeah, I mean, I see videos like that sometimes as well. And it's always difficult because the economy is an incredibly personal experience. Everybody has a personal inflation rate. Everybody has a personal grocery basket. Everybody has a personal experience with the labor market. And if one of those things doesn't work out, like housing, for example, of course you're going to feel stuck and you're going to feel frustrated and you're going to feel mad. If you have to work three jobs in order to afford your groceries, you're probably going to post a video to TikTok saying how frustrated that you are, because there is an idea that you should only have to work one job, and that you should be able to afford at least a one bedroom apartment on minimum wage. And I just think none of that has been a reality for a long time. But I do think it goes back to what we were talking about with a disconnect between sentiment and action. I think a lot of people will be worried about their financial circumstances, but still go out and overspend or not set up a budget or not practice healthy money habits. There's this thing called financial nihilism. And so it's just people don't believe in an economic future. So they're going to say like, I can't afford anything, but I'm going to spend regardless because I don't think I'm ever going to be able to retire. And so I think we see a lot of that where there's a lot of videos saying that people are doing one thing that seems disconnected from how they feel about their circumstances, but really it's reinforcing of their circumstances. People post their best lives to social media, and so if you're scrolling social media and assuming that all your friends can afford, you know, a summer trip to Greece, you're going to, of course, feel bad about your own circumstances if you can't. So I think that's a huge part of it. Comparison. We are the comparison generation, the Gen Zers, right?
Vass Bednar [00:20:19] Maybe we can also talk about generational divides and feelings about the economy a little bit more. More stats for you, Kyla, Canada ranks a whopping 58 in the world when it comes to the happiness of 18 to 29 year olds. Our recent federal budget tried to address this a little bit, right? It sought to emphasize generational fairness. Why do younger people have what seems like a much worse attitude about the economy, when we kind of expect young people to have that sense of optimism?
Kyla Scanlon [00:20:51] Yeah, I think for young people, it's hard. Right? So like, you're born into the tech bubble, you live through the recession and then you graduate into a pandemic. And so I think it makes sense that young people are struggling with optimism. I wrote a piece for Fast Company a year ago talking about how young people work, because a lot of employers are like, well, you know, the youth don't want to work anymore. And so that sort of generational attitude is tough too where young people, perhaps don't feel like they have the opportunity to get mentored by somebody older, feel like their work isn't being recognized. You know, people are working a lot longer. And so that makes mobility a little bit more difficult. And so I think for younger people, there are different policies that are being passed to support them. But it doesn't always feel good.
Vass Bednar [00:21:44] I found someone on, on social media who said, "Well, millennials are mad because after 2008, things never got better. If you can't empathize with what adult life has been like for my generation, you have no business commenting on our politics." Can our lack of optimism tip us towards a recession?
Kyla Scanlon [00:22:03] Yeah, yeah, that's the unfortunate part. You know, theoretically in the US it's 70% of GDP is consumer spending. And so people feel bad about their economic circumstances, they're going to not spend as much money. That ends up slowing the economy down because consumer spending is such a big part of the economy. And so behavior can definitely tip us into a recession. The tough part about what that tweet said, which I actually saw the tweet too.
Vass Bednar [00:22:32] Cool algorithm man.
Kyla Scanlon [00:22:33] Yeah, yeah, similar profiles. But I think that it's not true in a sense. We have had extreme tragedy, but every generation has like, you know, when you look back into the 1900s, it was just one thing after another then as well. And so I think for people to say this is the worst time ever. There's an element of truth because there's uncertainty. We had sky-high inflation. Nobody knows what the central banks are going to do next. But there's still a lot of good stuff that has happened. But we operate in the extreme ends of the distribution, and I think that's just what we see when we get on social media. And it's polarizing.
Vass Bednar [00:23:16] One other thing I see a lot on social media that you might too. I see a lot of these like price comparisons over time. Sometimes it's fast food, sometimes it's grocery. And from February 2021 to 2024, food prices in Canada increased by 21.6%. How important are prices when it comes to people's attitudes about the economy?
Kyla Scanlon [00:23:40] Prices are everything. Yeah, the inflation rate does not matter. Because, you know, when we're seeing that the inflation rate is going down, that just means that things are getting expensive less fast. And that's not exciting. Like people are still looking at their box of cereal and they're this is like, you know, $7 and that's upsetting to me because it wasn't always $7. And so I think prices are yeah, super duper important. And there's not a lot that can be done about lowering prices unless you go directly to the grocery stores and tell them to cut out the shenanigans. And that's yeah, of course people are going to be upset about that.
Vass Bednar [00:24:17] Why is it so difficult to recognize when life is good, right? Shouldn't good vibes be just as infectious?
Kyla Scanlon [00:24:26] Yeah, you would think, but the human brain trends towards negativity. Like we come from hunter gatherer worlds and we are constantly on the lookout for threats. That's what we pay attention to. That's what we remember. We remember losses more than happy times. And so it's just like a brain chemistry thing. So we're kind of fighting human nature, trying to get out of a vibecession because we don't like feeling bad, but it's comfortable for a lot of people. I mean, I fall into this trap all the time. It's just easier to be negative than it is to be positive.
Vass Bednar [00:25:01] Through your TikToks and your educational work, you're kind of a broker of the economy. You're a sense maker for this generation. I wondered what message you might have for young people in Canada specifically, that may feel like the economy just isn't working for them.
Kyla Scanlon [00:25:18] The dream of whatever you know your parents had is quite different now. It was very simple to get a home in the US during our parents generation, and now that's not really the case. The labor market has changed. You know, you have the the risks of AI. So I think that there's, like, real fear. But you can't, like, let fear dictate your life. There's a lot of policy solutions that are being passed. Becoming a policy advocate for what you believe in is great. You know, city redesign is something simple to think about, like more bike lanes or how do we get more cars out of the cities? And so I think there's always something to focus on and something to work on if you do feel frustrated by economic circumstances. And that's tough if you're working three jobs, but there's things to do and the work is never done.
Vass Bednar [00:26:09] Does the dream need to change?
Kyla Scanlon [00:26:10] Yeah, probably, I think so. I think that homeownership has become exorbitantly expensive. Like, I'm not sure if I'll ever be able to afford a home. And that is what you kind of sign up for when you're born, you're like, that'll be what I do one day. And so I think a conversation about wealth building has to happen. Like, how do we get people invested in the stock market? How do we think about business ownership, small businesses or employee stock option programs where you have, a stake in the business that you work for? I just think we need to have a broader conversation about wealth and wealth building. That doesn't include owning a home because it just doesn't work how it used to. And it probably shouldn't. Like, should a home be both a speculative asset and a place that you live? Probably not.
Vass Bednar [00:27:01] Kyla, thanks for joining us. I really appreciate it.
Kyla Scanlon [00:27:04] Thanks.
Vass Bednar [00:27:20] If you're still listening, thank you! This is the final episode of our inaugural season. I want to take a second to thank our incredible team, Katrina Onstad, Andrea Varsany and Cameron McIver for their hustle and expertise to make this show so great and so fun. I'd like to thank The Globe and Mail for championing us, especially Maryam Sanati as we carved it out. I want to thank all of our incredible guests for thinking things through, and I want to thank you for honoring us with your attention, we know it's precious. And we'd love to hear from you, so please send your thoughts and ideas for episodes that you might like to hear to lately@globeandmail.com. I'll see you in the fall.