Consumer Sentiment at Record Lows, But Spending Remains Strong in 'Vibecession'
-
Since 2020, the University of Michigan consumer sentiment survey has decoupled from its historical relationship with consumer spending. Sentiment is at record lows, but spending remains strong.
-
Before the pandemic, the survey accurately predicted consumer spending. But covid has severed this link, rendering the survey's projections wildly inaccurate now.
-
Economists built a model predicting sentiment pre-2020. It fits historical data well, but fails completely on recent data, projecting sentiment far above actual levels.
-
Although Americans report gloom about finances, their spending betrays no unease. Actions speak louder than words.
-
This "vibecession" suggests bad vibes may be the new normal. But the economy and spending remain strong despite low sentiment.
![](https://www.economist.com/img/b/1280/720/90/media-assets/image/20230909_WOT917.png)