The stock market is booming and the economy is strong, but fear of losing one’s job is increasing

The portmanteau “vibecession,” coined by Gen-Z economist and TikTok star Kyla Scanlon, refers to the discrepancy that occurs when public financial sentiment is negative even though the economy is not in recession. Given the growing gap between the stock market and job anxiety, the phenomenon appears to be in full swing.

A survey of labor market expectations by the Federal Reserve Bank of New York found that the average probability of being unemployed rose to 4.4 percent in July, the highest since 2014, up from 3.9 percent a year earlier.

The number of people seeking work in July was also the highest since 2014, at 28.4% – a sharp increase from the 19.4% of people seeking work a year ago. The report, which surveyed 1,000 nationally representative respondents, also highlighted several other worrying labor market trends, including a record low number of people still working for the same employer.

The survey came as the stock market as a whole posted gains for the eighth consecutive week on Monday and retail sales posted their biggest increase in over a year in July.

Still, signs of a labor market slowdown, including a weaker-than-expected July jobs report and rising unemployment, have some worried about a vibecession. A June survey by buy-now-pay-later company Affirm found that a majority of people believed the U.S. was in a recession. Meanwhile, top economists like Wharton professor Jeremy Siegel believe the U.S. is in a “Goldilocks economy” with strong growth and easing inflation. Economists use the term to describe an economy that is “just right,” meaning not too cold and not too hot, as in the children's book Goldilocks and the Three Bears.

Accordingly, market participants will be closely watching Fed Chairman Jerome Powell's annual speech in Jackson Hole, Wyoming, on Friday for signs of an impending interest rate cut.

Federal Reserve leaders have noted the declining labor market numbers ahead of the three-day meeting in Jackson Hole, and several of them said the Fed must keep an eye on its other mandate, the pursuit of maximum employment.

Both Chicago Fed President Austan Goolsbee and San Francisco Fed President Mary C. Daly said the central bank is closely monitoring unemployment to assess whether and, if so, by how much, interest rates should be cut.

And last week, Atlanta Fed President Raphael Bostic said Financial Times He said he was open to a possible interest rate cut by the central bank at its next meeting in September, but said the Fed would have to be “particularly vigilant.”

“Because our policies are lagging in both directions, we cannot really afford to be late. We need to act as quickly as possible,” he said.