A non-Recession Recession (a mild economic recession with a big drop in asset prices). A jobful Recession (jobs but things are bad?). Perchance, a vibecession.

In general, the idea that things are relatively okay, but not okay enough to be labeled capital-O-Okay. It’s good enough, but not great. I even gave a presentation at Bloomberg Live yesterday about it - this concept of a moderate, reasonable, fine, passable, economy, and how… bad that can feel.

•  Things are decent, but I am doubtful, therefore, everything is dire.

This quote from a member of Congress about the debt ceiling is really poignant - this idea that we are ‘only measuring success on how much we lost’ broadly applies to the entire economy.

My feelings on the debt ceiling are well-known - but I think when we have policy in place like this, policy that is regret minimization rather than goodness maximizing - like of course, things are going to feel dire.

It’s a form of loss aversion bias.

• People hate not having things

• They tend to focus more on what could disappear rather than what could be gained.

This, of course, applies to markets - “it will go up again bro” is the rallying cry of many bagholders. But what’s sort of funny about loss aversion bias is there is success right? Like there is some element of hope, of things being okay once again. It just comes an inverted package.

Tired Tropes

Harry tweeted this yesterday (he dm’ed me to say it isn’t his opinion but rather that of the recruiters but) I find this take so tiring and so old and so useless and so looped. Every generation ever has complained about those younger than them not working hard and being lazy and whatever.

It’s sort of like being the older sibling.

You watch your younger sibling frolic around after you feel like you just did all this work for them to be able to frolic with such bliss, and the question you keep asking yourself is ‘well, when is it my turn to frolic? >:-( I would also like to roll around in a field of daisies? What about me, and my Feelings?”

This old and tired and useless trope of ‘people don’t want to work anymore’ is like that too. A lot of people want to frolic! And they feel like they can’t. The subsequent sentiment that carries is a thematic that can be applied to the economy at large.

Where is my Frolic?

People are mostly fine! Indeed, some might even say that people are somewhat frolicking.

But if you don’t feel like you can frolic, are you frolicking at all?

And to be clear, nothing ever exists in a binary. There are some flashing red bells in terms of the speed at which some are becoming decidedly less unfine, but across the board things are relatively okay-ish, which is something to celebrate. As Felix Salmon wrote

"Americans [are] broadly happy with their own personal finances, but a majority consistently thinks (erroneously) that we're in a recession, and just 18% think the national economy is in good shape"

We aren’t in a Recession1! Jobs were good! Economy is humming along! Inflation is sort of going down!

• And people tend to see that in their own lives (hey, I’m doing decent)

• But then they look outside to the “ah yes, let’s waste the equivalent of 5 years of spending for the National Park Service on something stupid that doesn’t need to exist” debacle that is America’s political hellscape

Like of course the vibes are off!

But we also have no concept of measurement.

The Best Answer is I Don’t Know

Adam Mastroianni wrote a paper on The Illusion of Moral Decline on the idea that many people have that people (morally) are getting worse (they aren’t) -

And look, it’s fine to have strong opinions about things that you know nothing about—that’s kind of what the internet is for. But it’s not fine when those strong opinions lead to demands for actual changes in the world. If you think that morality is declining, then you must think that some switch has been flipped in society, causing it to produce worse humans… the trend doesn’t exist. It’s like activating the sprinkler system in a building that’s not on fire.

And that’s so much of everything!

Everything is terrible, but I’m fine, as Derek Thompson says - and this really complicates policy that could make the ‘everything is terrible’ part get better

Because most Americans say they’re personally fine, they might resist too much experimentation. This creates a confusing voting bloc, which is constantly angry about the state of things, but also fundamentally conservative about any change that overturns their “rather happy” life and “at least okay” finances.

I’ve written about doomer (Adam wrote about it too - “[crying fire is what] aspiring despots do, by the way: they cry catastrophe as a way of justifying their extreme measures. “Things are going to hell, but make me king and I’ll fix it all.”) and how our brains just love love love looping around big scary things - especially when its amplified by social media! Yes! Make it all feel bad.

And just to be incredibly clear, there are things to be feel bad about

• Student loan payments could be restarting

• NYC (where I am right now) is yellow and that’s bad for our brains (funnily enough, I was also in Denver and LA when they were yellow too from wildfires)

• Real wages are being squeezed by inflation

• Service sector indicators are slumping

• Big pharma manages to get even goofier and more evil

• Homes are expensive

• The share of adults who said they were worse off financially than a year earlier rose to 35%, the highest level since the Fed survey on economic well-being asked this question in 2014

Okay we get it

And this is usually when I would say something like “but listen everyone, there are also so many things to feel good about - jobs, inflation going down, economy mostly surprisingly somehow okay - but I think that again, this line from Adam encapsulates so much -

It’s very easy to feel like you know something about the past without actually knowing anything about the past. I just showed you data from more than 500,000 people who were asked whether morality has declined, and virtually none of them said “Gosh, I don’t know.” But for them, that was the right answer. They don't know. It took us years and another 12 million people to come up with even a halfway decent answer, which is “probably not.” And yet an answer came to everyone’s minds effortlessly, and they were happy to share it, and even to back it up when we asked them more about it. The past is a foreign country, but we all have the vivid delusion that we’ve lived there for a long time and know everything about it.

And that’s sort of the deal. We just don’t know.

• What we are doing is a protective mechanism of sorts, a way to say “well if things do get bad, I never got my hopes up that they would be good” which is a completely reasonable way to exist.

• We tend to confuse uncertainty for badness sometimes (and we live in a highly uncertain world)

  • I do this a lot - if I feel like I don’t know what to do about something, it’s way easier to catastrophize and say “well clearly, this is apocalyptic” rather than reasonably assess that uncertainty usually just means I don’t have the answer - not that the answer itself is bad.

But when have things like tired tropes and complete fabrication of what data is saying in order to spew some narrative or pump some bag (ahem #1 and #2) that’s when things begin to feel worse - the uncertainty doesn’t become something that can be wrangled into goodness, it becomes something choking us into badness.

So when we look around at the gaps between theory and data and reality, a lot of it is that. Uncertainty! Social media! Loud tweeters! There is a margin of error that has to be built in for the i-don’t-really-know (tough in the age of infinite knowledge) but it’s something to keep in mind when we look at sentiment or have broader discussions on How Things Are. People are uncertain, that uncertainty turns to fear, fear is scary, and that’s how we end up where we are.

I feel like I’ve been shouting about this dogmatic for the past several newsletters, so I plan to shift course soon but yeah. It’s just sort of the theme. And it’s hard to not bump into it.

Thanks for reading.

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