So Long ‘Vibecession,’ Hello Virtuous Consumption Cycle

Last year, social media influencer (and Bloomberg Opinion contributor) Kyla Scanlon famously coined the term “vibesession” to describe the weird and potentially self-sabotaging environment in which the US economy found itself: Conditions weren’t awful, but households and investors tended to think they were heading in that direction, and there was a risk that a recession would become a self-fulfilling prophecy. Thankfully, the vibecession is over and the economy can start to ride the tailwinds of a virtuous cycle of sentiment and activity.

The latest preliminary report from the University of Michigan showed Friday that US consumer sentiment jumped in early July to the highest since September 2021, exceeding all economist forecasts for the biggest one-month advance since 2006. The improving sentiment adds to a 17% surge in the S&P 500 Index since mid-March, a plunge in credit spreads and a recovery in housing activity in signaling that the tide has turned for sentiment of all kinds, including investors’ willingness to take risk. If there was previously a danger of willing the economy into recession, the recent surfeit of positive thinking just might help make the elusive “soft landing” economy a reality.