Below are some of the most interesting articles, quotes and charts I came across this week. Click here to subscribe to our free weekly newsletter and get this post delivered to your inbox each Saturday morning.
There’s been a lot of media attention on the concept of “vibecession,” or the angst consumers apparently feel even as the economy shows signs of resilience.
'Many households don't just feel worse off; they are worse off. Telling them the economy is in excellent shape only adds insult to injury.' https://t.co/iCw6xj181Y
— Jesse Felder (@jessefelder) December 7, 2023
But it’s not hard to see why many people may feel that way: inflation-adjusted personal income has been falling in way normally only seen during a recession.
An income-based explanation for "vibecession":
1) Even though we haven't had an actual recession over the past 2 years, inflation-adjusted personal income per capita (blue) have behaved in a recessionary way.
2) That's true even though "the economy is good" (orange) pic.twitter.com/4LUhj7nVXn
— Guy Berger (@EconBerger) December 6, 2023
Moreover, the jobs market now shows sign of deteriorating, a trend that could pressure consumer finances even further…
🇺🇸 Equity market once again trying to cheer "pivot" data in the form of JOLTS job openings. But maybe it's time to be a little careful what you wish for… pic.twitter.com/Rn5SZmhblF
— Mikael Sarwe (@MikaelSarwe) December 5, 2023
…not to mention the stock market which appears to be pricing in a heroically optimistic scenario for both earnings and interest rates next year.
Rates market is pricing cuts for 2024… Yet equity analysts are forecasting for 12% earnings growth.
But there’s not one example in the past 50 years when there’s been a combination of both (i) growing earnings and (ii) a Fed rate cutting cycle…
So which is right? pic.twitter.com/yk0F9rvJHZ
— Longview Economics (@Lvieweconomics) December 7, 2023
Benefiting most from this dynamic, of course, have been the Magnificent 7, whose outperformance has reached a rare extreme. Perhaps it’s time the “vibecession” finally catches up with them?
"The last time the Dow underperformed the S&P this badly was in 2000 during the heyday of the Internet 1.0 bubble…2024 is a make or break year for non-tech names to prove they still have relevance." https://t.co/0UCGtVzTLM via @dailychartbook @DataTrekMB pic.twitter.com/mHepraGdNw
— Jesse Felder (@jessefelder) December 8, 2023
Thanks for reading and have a great weekend!
