The Dow hit 50,000 but you can’t afford groceries — here's what’s causing this ‘vibecession’ and how to protect your money now

‘Vibecession’ is a term coined by economic expert Kyla Scanlon in 2022. She noticed that many Americans had bad “vibes” about the future even as the stock market climbed (1).

Today, the gap between consumer confidence and the stock markets is more of a chasm.

That worries economists.

Consumers who fear a recession may cut back on spending — and that can turn their fears into a self-fulfilling prophecy as the economy shrinks.

Here’s a look at the troubling disconnect between markets and consumer confidence in 2026.

On the positive side: Markets ended 12% higher in 2025, according to CNBC, and are still climbing (2). Unemployment is steady at 4.3% (3).

Sadly, those positives don’t show up in the Consumer Confidence Index, which is well below its four-year peak in 2024 (4).

What’s going on?

Here’s a closer look, along with tips on how to protect your short- and long-term finances amid a ‘vibecession.’

Perspectives on the economy

The bad “vibes” are not all in people’s heads. In November, Federal Reserve chair Jerome Powell acknowledged it.

Average Americans are struggling, particularly with the cost of essentials like housing, food, utilities, cars and more.

“There’s a bifurcated economy there,” Powell said (5). “Consumers at the lower end are struggling and buying less and shifting to lower-cost products.”

What Powell describes as a ‘bifurcated’ economy is commonly known as a K-shaped economy, a phenomenon that — like ‘vibecesson’ — emerged in the pandemic and continues today.

The wealthy are benefiting from soaring stocks and spending money while lower- and middle-class households struggle with affordability and layoffs (6), even if President Donald Trump called affordability a “con job by the Democrats” (7).

Currently, the top 10% of households are responsible for nearly half of all spending, while lower- and middle-class households struggle with affordability.

“The affordability crisis is not a hoax,” Rep. Sarah McBride (D-Del) wrote in December (8).

“It is a reality felt by Americans everywhere.”

The average family now spends 38% of their income on housing, a figure much higher that the typical budgeting recommendations (9).

CBS News reports that grocery prices are nearly 20% higher than just four years ago. A basket of groceries that cost $100 back in January 2022 would now cost around $119.12 (10).

And while unemployment figures may be relatively stable, it’s tough to land a job in the current “low-hire, low fire” labor market.