The article discusses the evolving disconnect between consumer confidence and actual economic indicators such as GDP and employment. While traditionally, negative sentiment did not directly affect spending, recent trends indicate that consumers are growing more wary amid weakening economic supports. Notably, as inflation and interest rates rise, combined with government spending cuts, consumers are becoming more cautious. Elizabeth Renter and Kyla Scanlon highlight that this change may indicate a shift away from the previous ‘vibecession’ where economic confidence did not translate directly to financial behavior.
But consumers continued to spend as the labor market remained robust. And aside from a brief dip in GDP, the economy avoided a recession.
Despite this month's notable improvement, consumers remain guarded and concerned about the trajectory of the economy,
Key buffers that propped up spending are disappearing, according to NerdWallet senior economist Elizabeth Renter.
The disconnect between weak readings on consumer confidence versus solid employment was previously described as a 'vibecession' by economist Kyla Scanlon.
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