Are We in a Vibecession? And What Does It Mean for Your Business?

Are We in a Vibecession? And What Does It Mean for Your Business?
Discover how perception can influence reality when it comes to the economy. Learn strategies to navigate uncertain times effectively.
by Paco De Leon Feb 12, 2025 — 3 min read
Are We in a Vibecession? And What Does It Mean for Your Business?

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Has the economic mood felt hard to read over the last few years? If you’ve been feeling this way, you’re not alone.

On one hand, economic data points to a healthy economy, from strong economic growth to a softening labor market, slowing inflation, a robust stock market, and a positively shifting consumer sentiment.

Yet, while the data reveals prosperity for some, the reality for many folks is quite different. Even if inflation is slowing, prices remain high for health care, housing, and food. For many folks, their dollar buys less. And while the stock market is thriving, one must invest in order to reap those benefits.

Author Kyla Scanlon coined the word vibecession — a playful term that captures a serious economic reality — to describe this cognitive dissonance. While vibecession isn’t a term you’ll find in a real economic textbook, the feelings consumers and entrepreneurs have about the current economic climate are. And that can have a real impact on our collective reality and how your business can stay ahead. The good news is, according to a recent report by the New York Federal Reserve, many households are starting to feel optimistic about their financial futures. 

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The power of perception and fulfilling prophecies

Economies are not just driven by data and hard facts; they’re also influenced by human psychology. Consumer confidence indices exist because how people feel about the economy affects how they behave. If enough people tighten their belts because they believe a downturn is imminent, that behavior can contribute to a slowdown.

So, in a vibecession, negative sentiment can become a self-fulfilling prophecy. Businesses might postpone investments, and consumers might cut back on spending — all based on a general sense of unease rather than concrete economic downturns. Identifying the signs of a vibecession is crucial to making sure you’re taking the right steps as a business owner.

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How small businesses feel the impact

It’s not hard to imagine that when folks are worried about the economy, it has a real impact on local businesses.

Customers cutting back

Fears of a recession or anxieties about the future can cause consumers to tighten their belts and spend less. And if your business offers products or services that might be considered luxuries, this can impact your sales and revenue.

Creeping costs

Other businesses are assessing their own costs and profitability. And suppliers might also move with increased caution, so your business may see costs creep up and remain higher than anticipated.

Lending limitations

During periods of uncertainty, banks and lenders may become more conservative, making it hard to secure loans to either expand or help manage cash flow.

How to navigate a Vibecession

So, how can you steer your business through these uncertain vibes? Think about it as if we’re navigating a defacto recession, and consider the following tactics: 

 

Communicate with customers

Talking to your customers is a cheat code for lots of reasons. First, because they will willingly give you valuable information, from how they’re feeling to what their current needs are.

For example, let’s say you run a dog grooming business, and for years your customers have been saying how they wish their dogs could have their teeth cleaned in between deep cleanings. That could be an opportunity for you to experiment with a strategic partnership with a vet, offering cleanings to dogs at your studio.

Customer conversations could also lead to more customer referrals, strategic connections, and testimonials that you can use to generate more business. If you haven’t prioritized customer conversations in the past, there is no better time to start than now.

Operate more efficiently

At the end of the day, a business is a series of interdependent operations. During times of economic uncertainty and downturns, the businesses running the smoothest, most efficient operations tend to survive.

Now is a great time to examine your business operations and tighten them up. What can be streamlined? Do you have any unnecessary spending that’s gone unnoticed? Can you leverage technology to improve efficiencies? Think about things like payroll or accounting, where key processes can be automated with the right tools.

Focus on cash flow and costs

A business needs to have cash coming in to survive. And during uncertain times, it’s especially important. Take the time and energy to understand and monitor your cash flow closely. Consider building a cash reserve to cushion against potential slowdowns. Stay on top of outstanding receivables and track larger one-time expenses.

Stay visible

Keep putting your business and yourself out there. Marketing is the mother of revenue. The moment you accept it as a rule of engagement, the sooner you can start executing. If you loathe marketing, consider this reframe: Providing value is the fastest path to receiving it. From launching a newsletter to getting started with influencer marketing, there are lots of effective marketing tactics to explore, depending on your customers, business type, and growth goals.

Whether we’re in a vibecession or not, the reality is that economic sentiment affects how people spend their money — and that impacts your business. While you can’t control the broader economic vibes, you can control how your business responds to them. Businesses that stay agile, maintain transparent communication with customers, and provide clear value tend to weather sentiment shifts best. Those that can adapt their offerings to meet evolving consumer priorities while maintaining quality and trust often find opportunities even when the vibes feel off. By understanding these dynamics, you can position your business to not just survive uncertain sentiment, but use it to gain a competitive edge.

Paco De Leon
Paco De Leon is the author and illustrator of Finance for the People, and host of the podcast, Weird Finance. She is the founder of The Hell Yeah Group, a financial firm dedicated to inspiring creatives to engage with their personal and business finances and Hell Yeah, Bookkeeping, a bookkeeping agency for creative businesses. Her career experiences in small business consulting, financial planning, and wealth management have informed her financial philosophies. She is a TED speaker and her work has been published or featured in The New York Times, Bloomberg, PBS, TIME, Good Morning America on other publications, and on NPR. She lives in Los Angeles with her wife.

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