Is the US economy ready to enter into a 'vibespansion'?

With the University of Michigan Survey of Consumers revealing a reading of 78.8 for January — its highest level since July 2021 — and inflation data showing inflation is cooling towards the Federal Reserve's target rate of 2%, the vibecession may be over for many consumers.

Kyla Scanlon, author of In This Economy?: How Money and Markets Really Work, joins Yahoo Finance to discuss the next movement in consumer sentiment and take a look at trends in the broader market moving forward.

The financial content creator comments on current consumer sentiment coming off of vibecession cues:

"If you ask people their number-one economic concern, a lot of times it is things are very expensive at the grocery store, and so I think inflation and inflation going down is key. However, when we talk about inflation going down, a lot of people think that that means that prices are going to go down, but that's deflation. And so inflation is improving. We do see a big recovery. It's getting a lot closer to the Fed's target of 2%. But I do think that prices are going to remain elevated. They're not going to go back down. I think that's going to create a lot of frustration for people."

Editor's note: This article was written by Nicholas Jacobino

Video Transcript

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JULIE HYMAN: Well, 2023 was the year of the vibe Session every day Americans weren't feeling good about the economy, even though the data wasn't necessarily that bad. But that may be changing in the new year. University of Michigan's Consumer Sentiment jumping in January, inflation cooling, again. Put simply, the vibes are off to a solid start in 2024.

Here to break it all down further is the author, educator, and the one who coined the term "vibe session," Kyla Scanlon. Now you're talking about vibe spansion, Kyla. You got another fun word to talk about what's going on. So people are feeling better?

KYLA SCANLON: Yeah. I mean, if you can look at the consumer sentiment metrics and see that people definitely are feeling better than they used to. And there's a lot of reasons why that could be happening. A lot of people are pointing to a change in media headlines. Media headlines are becoming more positive. Inflation is going away, so people might be feeling the impact of that. But, yeah, people are feeling a lot better, which is quite good for how we think about the economy.

JOSH LIPTON: And, Kyla, when you look at the data, are all people feeling better? Or truly-- or is it subset of consumers are feeling better?

KYLA SCANLON: Yeah. I mean, across the board the consumer sentiment metrics are pretty strong. You can also look at things like job satisfaction metrics and get an idea of how people are feeling about their jobs. They're feeling pretty good about their jobs as well. Of course, there's pockets of people who are not feeling as good. And that's always something to keep in mind. But across the board, we have seen a pretty strong increase in sentiment from most groups.