Don't call it a recession — but bad vibes are back in a big way

• Both employees and employers are worried about their finances under Trump 2.0.
• Consumer sentiment has dropped sharply because of economic uncertainty and unpredictable tariff policies.
• Lower spending and a slower job market because of a vibescession could lead to an actual downturn.

Americans aren't thrilled about the economy.

Business Insider has heard from retirees watching their investments fluctuate in the stock market, parents struggling with the high cost of groceries and childcare, and business leaders bracing for a downturn. This comes alongside the Trump Administration's tariff rollercoaster and sweeping cuts to the federal workforce. The US may not be in a recession yet for 2025 — but we are in a vibecession.

This growing distrust could have serious consequences, as a fear-driven pullback in spending is one input to an actual downturn. Cynical shoppers may avoid nonessential purchases, businesses could pause hiring, and investors might step back from the market. And, the slower the economy, the weaker it becomes.

"There's a massive amount of uncertainty that's really weighing on people," said Joanne Hsu, who oversees the closely watched University of Michigan Index of Consumer Sentiment, which tanked to its lowest in three years in March. "People are really worried that these policies are going to lead to a resurgence in inflation. We're seeing a deterioration in views related to the overall economy, which is related to personal finances, inflation, and most critically, labor markets."

The vibecession is back

The vibecession rears its head whenever Americans are feeling particularly uncertain about the economy. Even if the major economic indicators aren't alarming on paper, data shows that rapid changes on Wall Street and in the White House make consumers and businesses nervous.

Many consumers are worried about how federal policy will shape the cost of essentials, like groceries and housing. The Consumer Sentiment Index — which is based on surveys and interviews with hundreds of US adults by researchers at the University of Michigan — decreased by 16.1 points between December 2024 and March 2025. That's the sharpest three-month drop since the pandemic began in 2020.

The Economic Policy Uncertainty Index, similarly, has climbed over 60 points since December, a much higher-than-typical jump. The measure is based on how much major media outlets are writing about economic uncertainty, the frequency of disagreement among economic forecasters, and other factors.

The research firm Civiqs also found that over a quarter of Americans believe the economy is doing "very bad" right now. Google searches for "recession" spiked in the past 30 days.

Among consumers, Trump is losing ground on what has historically been his — and the GOP's — strongest issue. The majority of Americans disapprove of Trump's second-term job performance on the economy (54% disapprove) and how he's handling inflation and cost of living (55% disapprove), per an NBC News poll published March 16. It's taking a hit to the president's overall approval rating.

"If people both think the economy is deteriorating and they expect their own incomes to weaken as well, it's hard to imagine how robust consumer spending can really be under those circumstances," Hsu said.

Businesses aren't escaping the vibescession either. Many CEOs and executives are worried about what economic uncertainty means for profits, hiring, and growth.

The Federal Reserve Bank of New York found that general business conditions, new orders and shipments, employment levels, and financial optimism have all declined among businesses across the state in 2025.

"Small businesses have particularly few options and little wiggle room to deal with the sheer size of the tariffs in the pipeline," Diane Swonk, chief economist at KMPG, told BI in an email. "They both squeeze profits margins and prompt cuts to staff, while boosting prices."

At the C-Suite level, many companies' plans for hiring and capital investment, as well as sales projections, have also decreased since Trump's Inauguration — per a survey of 150 CEOs by Business Roundtable. Business Roundtable CEO Joshua Bolten wrote in the March survey report that the downward trends are due to "several factors, including signs of economic headwinds and an atmosphere of uncertainty in Washington."

Why Americans feel so bad about the economy

Vibecessions aren't new. Consumer sentiment similarly dipped during and shortly after the pandemic, and again ahead of the 2024 presidential election. Instability in the stock market, high inflation rates, and losses in the job market often lead to widespread financial anxiety. Still, Americans' current pessimism toward the economy is notable.

The present vibecession comes in the context of declines in the S&P 500, Dow Jones Industrial Average, and Nasdaq in recent weeks, which have seen some recovery but remain well below their February highs. Trump's steep — and quickly shifting — tariff policies have also left US businesses and consumers expecting a significant jump in prices for things like food, construction materials, electronics, and alcohol.

Inflation has eased from its post-pandemic highs, but many shoppers already feel like their budgets are stretched thin. The chaos around eggs, for example, has become a symbol of high grocery prices.

The Trump Administration and Department of Government Efficiency have added to that uncertainty with mass firing of federal workers and budget slashing for government programs. Layoffs also hit major companies like Meta, Amazon, Southwest, and others in rapid succession, further fueling the public's perception of economic turmoil. This comes as the white-collar job market is notoriously difficult to break into, despite overall unemployment rates holding steady.

Hsu told BI that typically consumer sentiment patterns fall along party lines — Democrats feel more economically confident when the president is a Democrat, and Republicans prefer Republican administrations. But, in the past few months, consumer sentiment has significantly declined among Democrats, Republicans, and Independents.

Vibescessions have financial consequences

The US isn't in a true recession. Economists and financial analysts told BI that economic downturns are measured based on several factors including long-term jobs and consumer spending data. A couple weeks of stock market and policy instability aren't enough to call a recession.

Still, even if the US economy isn't doing as badly as Americans imagine, a vibecession changes consumer behavior. People are likely to tighten their spending on nonessentials and delay major purchases, which could disrupt the travel industry and the housing market. Some small businesses and major corporations have also signaled that they will pass the price of Trump's tariffs onto consumers, which could contribute to shoppers buying less.

"Moral of the story is that when uncertainty spikes, we tend to err on the side of caution and delay big spending decisions," Swonk said. "We are seeing that base emotion play out in real time in the overall economy."

Retirees, and hopeful retirees, told BI that they are adjusting their investments in the stock market and 401(k)s to be more conservative. Job seekers may also become less likely to leave their current jobs or see outside promotions, affecting churn in the labor market, Hsu said.

The stock market has shown signs of recovery in the past few days, but America's latest vibecession isn't over — and the future is hard to predict.

"We're in a really unprecedented policy environment," Hsu said. "With policy changing every day, and every hour in some situations, it's really hard for consumers to plan in a meaningful way."

Do you have a story to share about your finances? If so, reach out to this reporter at allisonkelly@businessinsider.com.