Like Bidenomics before it, the vibecession rests on two false assumptions, first that the economy is either the best ever or the worst ever, and second that declining inflation means declining prices. Besides, if the economy is so good, why is everyone saying the American dream is dead?
Following the failure of “Bidenomics” to change people’s perception of the economy, politicians, the so-called experts, and the media class have decided on a new term of art, “vibecession,” to explain why the average person believes their own lying eyes rather than their betters’ enlightened opinion. According to proponents of the term, “vibecession” captures the disconnect between their description of the economy, which is overwhelmingly positive, and the average voter’s feelings about it, which is not so much. As Nate Cohn put it for The New York Times, “the vibe today is so biting and dour that public opinion is no longer responsive to material economic reality: The ‘vibe’ is bad, so voters can’t see that the economy is good.” Perhaps a more honest way to say it: Voters are ignorant fools that should just accept what they are told, despite the truth they are living every day. Like Bidenomics before it, this claim rests on two false assumptions, that they are necessarily aware of themselves. First, an economy does not have to be either awful or awesome with no in-betweens, literally the best of times and worst of times straight out of Charles Dickens. There are, of course, degrees of good and bad. The Biden economy, in this view, is not a full blown crisis of epic proportions – at least not yet on par with the Great Depression, Great Recession, or Great Economic Suicide of Coronavirus, but it’s also not nearly as positive as the 1980’s boom under President Ronald Reagan, the 1990’s under Bill Clinton, or the economy under former President Donald Trump before the pandemic intentionally shut everything down. It is far more comparable to the stagflationary period of the late 1970’s and early 1980’s, or the brief recession in the early 1990’s, not exactly the darkest of hours while not the brightest either. Therefore, we should not be surprised that there are some positive economic metrics to be found. The job market, in particular, has remained resilient, keeping unemployment low and increasing wages, albeit not fast enough to keep up with inflation. Economic growth has been sluggish, but despite two quarters of contraction in 2022 that would have been classified as a recession if a Republican were in office, quarter over quarter GDP numbers continue to rise, although at a slower than optimal rate.
These are certainly good things, but neither do they tell the full story, nor do they mean the economy is universally positive by any means, much less that we should expect the average person to sing its praises, thanking President Biden for delivering prosperity. The problem is simple: These positive numbers have been overwhelmed by stubbornly high inflation and interest rates, both of which have driven up prices faster than anyone has seen in 40 years, and neither of which would ever be at these levels in a traditionally good economy. It’s as though the economy is growing by ripples in a pond while inflation is a boulder that’s causing massive waves. The combination is undoubtedly what has led consumers, who experience pain every time they purchase something, to conclude the economy is not what the experts claim and they do so because what the experts are insisting rests on the second false assumption. Yes, inflation has been falling from its peaks in late 2022 and early 2023 to more reasonable levels, and that too is a good thing, but declining inflation does not mean declining prices or interest rates. Prices are still high, nor will they ever come down for most things, a reality the average person certainly realizes, however the experts try to spin it. It’s like rolling through a traffic light and telling the cop you came to a stop because your foot was on the brake. The car is still moving, prices are still rising, and higher prices are here to stay. Further, even with the slowdown of inflation, prices are still increasing at close to double the levels economists believe are optimal and the Federal Reserve’s own target. Interest rates also remain more than double what they have been in recent memory. Anyone who has attempted to buy a car over the past year, much less a house, is well aware of the impact. The compact sedan that was once $200 a month on a lease in 2020 is now $300 or more.
Ironically, CNN, at least, is simultaneously crowing about the economy while bemoaning the plight of Millennials, literary opining on what “broke the American dream for Millennials” at the same time they are pushing the idea of a vibecession. “Rachael Gambino and Garrett Mazzeo planned their financial life by the book: They went to college, paid down debt, saved aggressively, got married, bought a house, started a family. The dream. But sitting at the kitchen table of their suburban Pennsylvania home — an asset they feel both lucky to own and also somewhat trapped by — they say they wouldn’t do it all over again quite the same way.” Not surprisingly given massive inflation and high interest rates, this young couple “still feels like they’re on a knife’s edge. Their day-to-day lives are dictated by a spreadsheet where Garrett, 35, meticulously manages every dollar coming in and out.” “This is the American Dream,” Rachael says. “But at what cost? What are we paying for the American Dream now?” According to CNN, their generation has been uniquely battered by both the Great Recession and the pandemic, plus the “culprits behind the [current] bad vibes are obvious: high prices, an impenetrable housing market, persistent inequality, rising debt” though what “inequality” has to do with their situation remains unsaid, or the fact that the average person generally vacillates between loving owning their own home and trapped by it once an unexpected expense pops up. “For Millennials, [however,] hit with two world-altering economic downturns before their 40th birthdays, bad vibes come standard.” Even if you set aside that the near-sainted Barack Obama was said to have led us through the Great Recession, armed with a trillion dollar stimulus, when once upon a time progressive pundits declared “everything was awesome,” and the Biden economy was supposed to have rescued us from the clutches of the pandemic, creating more new jobs than anyone in the history of the universe, it’s obvious the real pressure facing this young family is the Biden economy itself.
As it turns out, they purchased their home in 2022, which means they are likely paying around a 7% interest rate. According to CNN, they put 20% down on a $425,000 house, for a loan of $340,000 and a monthly payment of around $2,260. If they’d purchased when former President Trump was in office, however, their rate would be about half, and their payment only $1,530, a difference of $700 per month, every single month, a monstrous total of almost $9,000 per year, which will surely wreak havoc on the budget of any young family. This is a microcosm for why everyone thinks the economy sucks, and it has nothing to do with what happened fifteen years ago or even what happened four years ago. It is the reality we are living in right now, thanks to President Biden’s policies, before which he was warned by left-leaning economists would unleash inflation including Larry Summers, a member of the Obama Administration. He attempted to deny the fundamental laws of the economy, then denied what was happening when they insisted inflation was merely “transitory,” and this family is paying the price. For their part, CNN briefly alludes to the immense challenge, especially for less affluent buyers like this family, posed by high interest rates, but then swiftly moves on to the real issue they want to address, the generational wealth gap. “For years, Millennials, now ages of 27 to 42, have lagged behind their Baby Boomer parents and Gen X counterparts in accumulating wealth.” This, they blame entirely on the fantastic job they said President Obama did during the Great Recession, which somehow is now spun as critics of “the Obama administration dubbed the decade following the Great Recession ‘the barbecue economy’ because the recovery was low and slow. The result was a Millennial wealth gap that was larger, relative to other generations.” For reasons that remain unclear, they fail to mention any other potential causes of the gap. This family, for example, had their first child and bought their first home in their mid-30’s a full decade older that many in Generation X and most in the Baby Boomers. They have stayed longer in school, wracked up more debt, which CNN alludes to, were later to start their careers, later to save, later to purchase a home (a study found that 62% of Boomers owned their own home by 35 compared to 7.3% of Millennials), and later to build their lives, not to mention other factors like spending on leisure and entertainment.
At the same time, they will likely live and work longer, and in principle at least, could make this up in their later years. Incredibly, there is some evidence they are making it up already and making it up fast. According to the figures provided by CNN itself, this generational wealth gap was about 34% below expectations in 2016, but a short three years later it was down to 11% – I wonder who was in office during that period? Of course, anyone who understands the slightest thing about wealth creation should not find this surprising: The miracle of compound interest means the amount of wealth you grow accelerates as you get older, like a snowball that keeps growing faster and faster. With a little luck, it doubles every seven years, a little less luck every ten, plus what you put into it. The $100,000 you have in your 401K at 25, should be well over $250,000 by 35, $500,000 by 45, and $1,000,000 by 55 – if you do the hard work of saving and budgeting. This means, necessarily, that older generations who are about to retire will be generate considerably more wealth in their final years before exiting the workforce, but for reasons that are unexplained, this remains a surprise to the experts and much of the mainstream media. The “wealth gap” crisis, is in fact, a story that repeats itself every generation since the Baby Boomers themselves. Once upon a time, the wealthiest generation in history was also considered the end of the American dream. Earlier this year, City Journal, the magazine for the right-leaning Manhattan Institute, described “The Retirement Crisis That Wasn’t, Experts predicted that Baby Boomers would be broke in their old age. Instead, they’re one of the richest generations.” As they put it, “Thousands of stories expounded on the inadequacy of private-sector retirement plans and of the government policies regulating them. Policymakers urged expanding public welfare programs (usually with higher taxes on the rich) to meet the impending disaster: a massive generation retiring without an adequate safety net. Otherwise, the bleak future for many Boomers, one headline predicted, would be ‘Work, Work, Work and Die.’ And then, as if someone flipped a switch, the coverage changed dramatically. Now, not a week goes by without some story declaring that retiring Baby Boomers constitute one of the richest generations in history. Far from being poor, they’re now dubbed ‘The Luckiest Generation,’ sitting on a staggering $78 trillion in assets that even a dour media can’t ignore. As a group, the Boomers have become such a wealth juggernaut that they grew $14 trillion richer during the pandemic, even as millions of everyday workers suffered financially from Covid shutdowns. Rather than expanding benefits for Boomers, politicians now propose reducing programs like Social Security payments for the most affluent recipients, hoping to preserve funds for future generations who—the media tell us—are facing a retirement crisis.”
The doom and gloom predictions then were much the same as they are now. From pronouncing “the end of the American dream,” according to the Associated Press, to claims that “retirement as current retirees know it…maybe impossible for all but the most affluent” in 1996. As late as 2008, the warnings continued apace with the “Nexis database of newspaper and wire-service stories recorded more than 1,000 articles about a boomer retirement crisis” and a Government Accountability Office Report that was used to declare the only way to solve the crisis was with “universal access” to pension plans. In response, many state and local governments did exactly that – only to short pensioners and refuse to fund the plans properly, robbing Peter to pay Paul as the government always does. “In the past 20 years, state and local contributions to pensions have soared more than fivefold—to $221.4 billion, from $39.2 billion, an average annual increase of more than 9 percent. Even so, the plans remain underfunded by more than $1 trillion by their own accounting standards, and by more than $6 trillion using more credible standards.” Less intuitively, pensions are not actually wealth. Even should recipients receive what they were promised and the taxpayer continuing to pay for what was promised, they are transfer payments that cannot be passed down to the next generation. “By contrast, the Boomer generation that has supposedly been saving too little for its retirement now has so much wealth that its members won’t even be able to spend it all. And it doesn’t go away when they die. Some of these fortunes lie in those individual retirement accounts, demonstrating the wisdom of long-term saving and investing—and of the magical powers of even modest rates of compound annual growth.” Needless to say, this has not stopped the media and the expert class from declaring more crisis are on the horizon, unless we put the government in control. Last month, Fortune wrote much the same piece as CNN, except about Generation X. Literally, “Gen X has the largest wealth gap of any generation, and it means ‘the American Dream of retirement is going to be a nightmare’ for them.”
Ultimately, the experts have only been consistent about two things: The American dream is dead, unless you put them in charge, and their obsession with pushing big government policies while shilling for Democrat politicians. There is a lesson here for young workers in Gen Z, a lesson they really need to learn: Families that budget wisely, work hard, and save what they can, still build real wealth and still live the dream.
Confessions of a Conservative Atheist 