The ‘Vibecession’ Economic Advice Gen Z Responds to When It Comes to Money

When there is a common disconnect between the economy in the U.S.  and the general public’s negative perception of it, especially when it comes to younger generations, you might find yourself in a “vibecession.” This term, coined by Kyla Scanlon — often dubbed Gen Z’s favorite economist — refers to times when everyone seems to have a pessimistic or negative view of the current economic state .

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Gen Z has latched onto this concept, as their consumer confidence is slower to recover in areas such as the housing market or student loans.

Those born between 1997 and 2012, Gen Zers are the first generation to grow up with smartphones, social media and a constant feeling that the other recession shoe was about to drop. They are tech-savvy, highly attuned to global trends and, most importantly, uniquely positioned in an economic landscape shaped by the gig economy, inflation and increasing income inequality .

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Quick Take: What Is ‘Vibesession’?

“Vibesession,” a portmanteau of “vibe” and “recession,” is a term that encapsulates how Gen Z perceives the current state of their finances in the surrounding volatile American economy. Here are some key takeaways:

• It’s not just about traditional indicators like stock markets, inflation rates or unemployment statistics — it’s about how the economy feels.
• This generational shift highlights a cultural movement where emotional and mental well-being is becoming central to financial decisions.
• For many in Gen Z, their outlook on money is heavily influenced by the bad feeling they get from the economy and their surroundings, rather than strictly by economic reports or forecasts.

Scanlon wrote in her newsletter, “If people have an experience (say, living through the 2008 recession) and evidence (home prices skyrocketing) that might shape some of their expectations — ‘wow, another unprecedented event to live through,’ which shapes their perception (things suck) and their interpretation of the future (things will continue to suck) — that shapes their narrative, which can shape reality.

“So when people are feeling bad (which they are right now), they might pull back on some aspects of spending — which we have seen. Inflation is the bogeyman in the room.”

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Gen Z vs. the US Economy

One of the most significant differences in how Gen Z approaches money is their commitment to mental health. Burnout, anxiety and depression are widespread issues, and financial stress is a major trigger. Unlike previous generations, who often took pride in long hours and high-pressure careers, Gen Z is more likely to quit a job that negatively impacts their mental health or well-being, even if it means earning less in the short term.

When it comes to the blame game, Gen Z almost seems to operate under the impression that inflation is the status quo. Who exactly is responsible for the actual economic circumstances, or better yet, how they feel about those circumstances?

Scanlon wrote, “There is so much ‘blame’ to place on all the things going wrong, and YES there should be blame placed on certainty entities. The Fed moved too slow, the Biden Administration seems to prefer moving backward versus forwards, and the sheer mismatch of supply and demand led to systems crumbling.

“The uncertainty that all this creates is visceral, and it shows up in the average person’s life in a painful and prevalent way. It’s simple to say ‘but my guy, the economic data’ — but that doesn’t recognize the everyday experience of many.”

Why Gen Z Embraces Financial Minimalism

Simplifying your life by streamlining your finances is a philosophy taken straight from the book of Gen Z. As a generation that has been faced with inflated housing costs, expensive education and an uncertain job market, they’re making lifestyle adjustments to avoid unnecessary debt and financial entrapment. Rather than chasing material wealth, they prioritize essential purchases and value experiences over physical possessions.

Financial minimalism also means opting for smaller homes, limiting major purchases and cutting back on lifestyle inflation. For many, it’s about making intentional choices to live more simply, a trend that ties into their desire for financial freedom and mental well-being.

Gen Z and the Gig Economy

It would seem that one job is no longer guaranteed to be enough, even if you are on a stable career path. Gen Z has fully embraced side hustles, freelancing and gig work, because multiple income streams are imperative to making ends meet in many cases. With increasingly fragile job security, they view a diversified income as essential.

Rather than simply saving for retirement, Gen Z is more focused on immediate financial security and flexibility. Side hustles provide extra cash and the opportunity to explore passions, which feed into the “vibes” they seek — freedom and control over their lives.

Final Take To GO

The bottom line is that the financial world is changing, and so are the attitudes that come with it. Gone are the days when previous generations, like baby boomers, would work one job, buy a house, earn a pension and retire at age 65. However, all generations could learn from Gen Z’s instinct to trust their gut before they metaphorically get punched in it by volatile economic shifts.

This article originally appeared on GOBankingRates.com : The ‘Vibecession’ Economic Advice Gen Z Responds to When It Comes to Money