Global Macro Research
PoliticsVibes versus reality
US consumer sentiment is at lows normally reserved for times of severe recession. Regardless of whether household perceptions have broken from reality, or macro data are failing to capture a wide swathe struggling to get by, the ‘vibecession’ matters for politics. Ultimately it feeds into votes, policy choices and back into the economy and markets.
Authors
Robert Gilhooly
Senior Emerging Markets Economist
Lizzy Galbraith
Senior Political Economist
Contributors
Jon Butcher, Cameron Love
Duration: 1 Min
Date: 22 Jul 2026
Key Takeaways
- Rock bottom US sentiment readings and discontent with the political system stand in stark contrast to historically still low unemployment, a booming stock market and robust growth.
Of course, it is possible that headline macro indicators fail to capture important dynamics under the surface that may be killing the ‘vibes’. For example, an inflation hangover from the pandemic, wealth gains being skewed to the richest, or ongoing structural change that is making job prospects increasingly uncertain.
- That said, it is hard to distinguish between genuine economic hardship and pessimism coinciding with a solid economic backdrop. Social media is potentially amplifying a disconnect to personal finances. Other non-economic factors, such as social ones, may have also spilled into sentiment.
- In that sense, it is not impossible to envision consumption and economic growth continuing at robust rates even if sentiment remains severely depressed. But the ’vibes’ are crucial to defining the political landscape: we expect that anti incumbency will become an engrained feature of politics, feeding into policy volatility and more frequently unsettling markets.
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