The Dow hit 50,000 but you can’t afford groceries. How to protect your money through this ‘vibecession’

If you’ve got the blues about the economy — even as stock markets and your 401(k)s soar — you’re not alone.

You are experiencing the ‘vibecession.’ And it’s real.

‘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.’

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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.

Meanwhile, a host of high-profile companies — including Amazon and Walmart — have been laying people off in the thousands.

Read More: The average net worth of Americans is a surprising $620,654. But it almost means nothing. Here’s the number that counts (and how to make it skyrocket)

How to cope with the new economy

So how can you account for the different realities between your investments and your bank accounts?

Hold steady on your investments

While pulling funds out of your investments to cope with low affordability may be tempting, experts advise keeping your investments — including your monthly contribution rate — steady, in order to avoid losing out on substantial gains that can help you retire comfortably.

A steady contribution rate is also key to ensuring you aren’t trying to “time the market” — a poor strategy that generally results in net losses rather than gains.

Automate your savings

That way you can ensure you’re getting your maximum employer match on your 401(k), and look for ways to cut spending at home to ride out this period of historic inflation.

Pay attention to your budget

Budgeting can be your friend during this uncertain period.

Keep track of your monthly spending, and look to pay down debt quickly so that you can free up more room in your budget for spending instead of paying interest fees.

You can also find free apps that help you find coupons and flyer deals at the grocery store to combat that 20% increase in prices, and even help you to track unused subscriptions so that you’re not bleeding money each month with no benefit.

Tracking spending can help you to feel that you’re getting the most from your money, and can help you identify your goals and values — making your dollar go farther on the things you really need and the discretionary purchases that really improve your quality of life.

Feeling anxious about affordability is understandable right now. But you can improve the vibe by taking real actions.

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Article sources

We rely only on vetted sources and credible third-party reporting. For details, see our editorial ethics and guidelines.

Kyla Scanlon (1); CNBC (2); Bureau of Labor Statistics (3); The Conference Board (4); Bloomberg (5); New York Times (6); PBS News (7); McBride Memo (8); National Association of Home Builders (9); CBS News (10)

This article provides information only and should not be construed as advice. It is provided without warranty of any kind.