Markus Andrews

“Vibecession” is the disconnect between how well the economy is doing and how people feel about their financial standing.
Nearly half, 45%, of voters say they are financially worse off now than they were four years ago, according to NBC News exit poll data.
Yet economic metrics show otherwise.

Some consumers have been weighed down by a “vibecession” for a while now — and those feelings might get worse, experts say.
A vibecession is the disconnect between consumer sentiment and economic data, said Kyla Scanlon, who coined the term in 2022. Scanlon is the author of “In This Economy? How Money and Markets Really Work.”

“It’s this idea that economic data is telling us one story and consumer sentiment is telling us another,” she said to CNBC.
Nearly half, 45%, of voters say they are financially worse off now than they were four years ago, and the highest rate since 2008, according to NBC News exit poll data.
Yet economic metrics show the economy is booming. Inflation, while it’s still a burden for consumers, has slowed down significantly. While some warning signs have popped up in the job market, to some degree conditions are normalizing from the red-hot market of a few years ago.
“The economy is so extraordinarily personal, and people really hate inflation,” said Scanlon. “That’s what we saw in this presidential election.”
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Even if the economy stays on track, Americans will likely continue to feel a vibecession, experts say.
The vibes might actually get worse, depending on what policies President-elect Donald Trump enacts, said Jacob Channel, senior economist at LendingTree. High-rate tariffs on imported goods will likely wipe out progress made to reduce inflation.
“If Donald Trump as president enacts the economic policies that he proposed as a candidate, we’re not only going to have a vibecession, we’re going to have a real recession,” Channel said.

Inflation and the labor market

Inflation, or the rate at which prices for goods and service increase over time, has come down — which means prices are still rising, but at a slower pace. Prices overall remain high, said Brett House, economics professor at Columbia Business School.
“Americans’ lingering frustration with the economy and their personal circumstances appears rooted in the persistently high prices that remain post-pandemic,” he said. “This makes for daily sticker shocks when buying groceries, getting a burger, paying rent and filling up the car.”
The consumer price index, a gauge measuring the costs of goods and services in the U.S., grew to a seasonally adjusted 0.2% in September, putting the annual inflation rate at 2.4%, according to the Bureau of Labor Statistics.

While the Federal Reserve is still concerned about inflation, “we’re seeing these signs of weakness in the labor market,” Scanlon said.
The quits rate was 3.1 million in September, a 1.9% decrease from a month before, the Bureau of Labor Statistics reported. There’s also a slowdown in hiring. The economy only added 12,000 jobs in October, the BLS reported. That’s less than the forecast of a 100,000 increase and lower than the 223,000 jobs added in September.
To be sure, “a lot of this is just simply normalization after the distortions that occurred after the Covid shutdowns,” said Mark Hamrick, senior economic analyst.
Additionally, the unemployment rate continues to hold steady at 4.1% and wage growth is up 4% from a year prior. “This suggests that the labor market remains firm despite signs of weakening,” JPMorgan noted.

‘What the bond market is telling us’

The stock market rallied after the presidential election results. Just before the close on Wednesday, the Dow Jones Industrial Average had surged more than 1,500 points to a record high. The S&P 500 also popped more than 2%, while the tech-heavy Nasdaq Composite jumped 2.9% — both to record highs.
U.S. bond yields also rose. The 10-year Treasury yield jumped 15 basis points on Wednesday closing to trade at 4.43%, hitting its highest level since July, as investors bet a Trump presidency would increase economic growth, along with fiscal spending.
The yield on the 2-year Treasury was up by 0.073 basis point to 4.276%, reaching its highest level since July 31.
That could be a warning sign, Scanlon said: “I don’t think the inflation story is over yet. That’s what the bond market is telling us.”
Depending on what policies are enacted under Trump’s second term, the inflation problem might get worse, experts say.

“When we see Treasury yields rising [and] the possibility of another $7 [trillion] to $10 trillion added to federal debt, those are not anti-inflationary moves, nor are mass deportations,” Hamrick said.
Trump has proposed a 10% to 20% tariff on all imports across the board, as well as a rate between 60% and 100% for goods from China. Such moves “will be inflationary,” Scanlon said. On top of that, his fiscal plan could potentially add $7.75 trillion in spending through fiscal 2035, according to the Committee for a Responsible Federal Budget.
“Who knows what will actually get passed from this fiscal plan, but massive tax cuts and tariffs … it’s expensive, and the bond market’s telling us that,” she said.

‘Vibecessions’ going forward

According to the National Bureau of Economic Research, a recession is “a significant decline in economic activity that is spread across the economy and lasts more than a few months.” The last time this occurred was at the onset of the pandemic in 2020.
However, it doesn’t necessarily take for these conditions to occur for consumers to feel negative about the economy. It can be “very difficult to square” what people are feeling in their everyday lives versus national averages and medians, experts say.
“There’s still going to be that continued disconnect between how people feel and what the economy is doing,” Scanlon said.
To that point, “the vibecession will endure,” Channel said.
And if consumers end up having to deal with extra costs associated with tariffs every time they go to the grocery store, “the vibes might actually start to get a whole heck of a lot worse,” Channel added.

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A trader wearing a Trump hat works on the floor of the New York Stock Exchange (NYSE) in New York, US, on Wednesday, Nov. 6, 2024.
Bloomberg | Bloomberg | Getty Images

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Here’s what CNBC TV’s producers were watching as the major averages jumped to fresh all-time highs, and what’s on the radar for the next session.

The Trump rally

If you missed it the Russell 2000 picked up 5.84% on Wednesday, hitting a new 52-week high.
The Dow Jones Industrial Average was up 3.57%, hitting a fresh all-time high.
The Nasdaq Composite was up 2.95% Wednesday, posting a new record.
The S&P 500 was up 2.53%, also hitting a new high
We’ll follow these market stories closely to see if the move higher can continue.

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The S&P 500 in 2024

Sector check

Financials were the biggest sector mover Wednesday, up 6.16%, hitting a new high.
Industrials were up 3.93% Wednesday, hitting a new high.
Energy was up 3.54% in the session. It’s now 4.28% from the April high.
Real Estate fell 2.64% during trading. It’s now 5.6% from the high. 
Consumer Staples fell 1.5%. The sector is 5.76% from the September high.
Utilities fell 1%. It’s now 5.72% from the mid-October high.
Duke Energy reports Thursday morning. The stock is flat over the past three months, and it is 6.3% from the October high.

The transports

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ArcBest shares in 2024

Mortgage rates

CNBC TV’s Diana Olick will be tracking the numbers.
The 10-year Treasury note yield rose to 4.43% Wednesday.
The SPDR S&P Homebuilders ETF (XHB) is up more than 2% so far this week.
Lennar fell 4.8% in the session. The stock is 13% from the September high.
D.R. Horton dropped 3.8% Wednesday. The stock is 16.6% from the 52-week high.
PulteGroup fell 3% during the day. The stock is 13.6% from the October high.
KB Home fell 2.6%. The stock is 11% from the September high.
Taylor Morrison dropped 1.44% Wednesday. The stock is 1.8% from the September high.

Lyft

The ride-sharing company reported Wednesday afternoon.
CEO David Risher will be on “Squawk Box” in the 8 a.m. hour, Eastern.
The stock is 31% higher over the past three months.
Lyft is still 30% from the March high.

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Lyft in the past three months

Arm Holdings

The new chipmaker on the block, relatively speaking, reported quarterly earnings Wednesday afternoon.
CEO Rene Haas will be on CNBC TV in the 10 a.m. hour.
Arm is up roughly 28% in the past three months
The stock is 23% from the July high.

Hershey

The chocolate company is down 11% over the past three months.
Hershey is 16.6% from the May high.

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Hershey shares in 2024

Carlyle Group

The global investment firm is up about 38% in the past three months.
Carlyle hit a new high Wednesday.

Datadog

The cloud company reports Thursday before the bell.
The stock is up around 22% in the past three months.
Datadog is 7.4% from the February high.

Cloudflare

The company reports Thursday after the bell.
Cloudflare is up 21% in three months.
The stock is 20% from the February high. More

Funds tracking international equities largely pulled back as investors reacted to Donald Trump’s win.
It marks a stark contrast to rallying U.S. equities.

A balcony above a trading floor inside the Euronext NV stock exchange in Paris on March 13, 2023.
Nathan Laine | Bloomberg | Getty Images

Several U.S.-listed funds tracking global stocks pulled back in Wednesday’s session as investors considered Donald Trump’s victory harmful to international equities.
Closely followed exchange-traded funds from iShares tracking South Korea, Hong Kong, Taiwan and Chile all slid on Wednesday. That comes despite major U.S. indexes soaring to record highs.

Those idiosyncratic pullbacks come as traders ready for President-elect Trump’s proposed policies for taxing imports. He has floated a tariff of up to 20% on all goods coming into the U.S., with an especially high 60% levy on those coming from China specifically.
This policy was unpopular among voters, according to NBC News polling. But it appeared inconsequential in the race, despite the economy more broadly being a main issue for Americans heading to the polls.
“While the investing landscape remains favorable in the U.S., international markets are very exposed to tariff policy, ” said Yung-Yu Ma, chief investment officer at BMO Wealth Management. “That uncertainty could limit near-term upside in global stocks.”
These moves reflect the divergence between U.S. and international markets as investors around the globe take in America’s election results.
While the Dow Jones Industrial Average notched its best day in around two years, European markets largely struggled on Wednesday as it become clear that Trump would prevail. In the U.S. market, the iShares Core MSCI Europe ETF (IEUR) slid more than 2%.

Asia-Pacific markets were more mixed, with Japan’s Nikkei 225 bucking the downtrend. Still, the U.S.-listed iShares MSCI China ETF (MCHI) shed more than 2% on Wednesday.
However, the Global X MSCI Argentina ETF (ARGT) climbed around 3% and touched a new 52-week high, a rare bright spot among international-focused funds. The South American country last year elected libertarian Javier Milei, who was compared widely to Trump, as president.
The ICE U.S. Dollar Index, which tracks to the U.S. greenback against a basket of international currencies, reached its highest level since July. LPL Financial chief technical strategist Adam Turnquist noted that the dollar’s rally comes as inflation expectations rose following Trump’s victory.
Turnquist said continued strength in the American currency can hurt international stocks, particularly emerging markets. These markets have underperformed U.S. counterparts in recent years. Indeed, the iShares MSCI Emerging Markets ETF (EEM) slid more than 1% on Wednesday.
— CNBC’s Sarah Min, Jesse Pound and Hakyung Kim contributed to this report.

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President-elect Donald Trump has promised to eliminate taxes on Social Security benefits.
Even with a Republican majority in Congress, that proposal could face hurdles.
Experts say it’s still too early to factor that change into financial plans.

Republican presidential nominee and former U.S. President Donald Trump arrives to speak at his rally during the 2024 U.S. Presidential Election, in Palm Beach County Convention Center, in West Palm Beach, Florida, U.S., November 6, 2024.
Brendan Mcdermid | Reuters

On the campaign trail, Republican presidential candidate Donald Trump made a notable promise to retirees: No taxes on Social Security benefits.
Now that Trump has won a second presidential term, that may prompt Social Security’s beneficiaries to wonder whether that change may come to pass.

But nixing those taxes may be a difficult task, even if Trump has a Republican majority in both the Senate and the House of Representatives. Any changes to Social Security would require at least 60 Senate votes, and Republicans would therefore need some Democratic support to pass those changes.
Just eliminating taxes on benefits, without any other changes to make up for that loss in revenues, would worsen the program’s current funding woes, experts say.
“It’s hard for me to imagine that Democrats would be willing to provide votes to get over that 60-vote threshold and weaken Social Security solvency,” said Charles Blahous, senior research strategist at the Mercatus Center at George Mason University, who has also served as a public trustee for Social Security and Medicare.
“I think a lot of Republicans would have heartburn about it, too,” he said.
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Ending taxes on Social Security benefits — along with other Trump proposals to end taxes on tips and overtime, impose tariffs and deport immigrants — would “dramatically worsen” Social Security’s finances, the Committee for a Responsible Federal Budget found in a recent report.
The Trump campaign has pushed back on those findings, calling the Committee for a Responsible Federal Budget “consistently wrong” in a statement to CNBC when the report was released.
The campaign did not respond to a request for comment on Wednesday, about where the proposal stands on Trump’s priority list following his inauguration.
The Social Security trust fund used to help pay retirement benefits is projected to run out in 2033, according to the program’s actuaries. At that time, beneficiaries could see across-the-board benefit cuts, though the president may have the ability to determine how those reductions are distributed among beneficiaries, according to recent research.

Higher-income seniors would benefit most

Experts say those who would benefit most from eliminating taxes on Social Security benefits would be the wealthy.
Households with between $63,000 and $200,000 in income would benefit most from the change, according to an August analysis from the Urban-Brookings Tax Policy Center.
Lower income households making $32,000 or less would not get a tax cut, as most of their Social Security benefits are not currently taxed. Meanwhile, those with between $32,000 and $60,000 in annual income may see about $90 in tax cuts, according to the research.
“You’re giving a tax break to the higher-income senior population, so that might wind up mitigating its political sale ability as well,” Blahous said.

Currently, up to 85% of Social Security benefits may be taxed based on an individual’s or married couple’s income. Those taxes are determined based on a formula called combined income, or the sum of adjusted gross income, nontaxable interest and half of Social Security benefits.
Individuals face up to 85% in taxes on their benefits if they have more than $34,000 in combined income; for married couples that applies if their combined income is more than $44,000.
Individual beneficiaries may pay taxes on up to 50% of their benefits on combined income between $25,000 and $34,000, or for married couples with between $32,000 and $44,000.
Because those thresholds are not adjusted, more Social Security benefit income becomes subject to income taxes over time.

For now, financial advisors say it is too early to factor in the elimination of taxes on benefits into financial plans.
“You don’t know what the law or policy is going to be if it hasn’t even been properly drafted yet, much less adopted,” said David Haas, a certified financial planner and owner of Cereus Financial Advisors in Franklin Lakes, New Jersey.
“I wouldn’t jump to any conclusions,” he said. More

On the campaign trail, President-elect Donald Trump proposed sweeping new tariff policies that economists say would stoke inflation and hurt the U.S. economy.
The Tax Policy Center and Peterson Institute for International Economics predict the typical U.S. household would pay roughly $2,600 to $3,000 more per year due to higher prices.

Donald Trump speaks at a rally on Nov. 5, 2024 in Grand Rapids, Michigan.
Scott Olson | Getty Images News | Getty Images

President-elect Donald Trump won Tuesday’s presidential election partly by addressing Americans’ economic anxieties over higher prices.
Nearly half of all voters said they were worse off financially than they were four years ago, the highest level in any election since 2008, according to an NBC News exit poll.

But a cornerstone of Trump’s economic policy — sweeping new tariffs on imported goods — would likely exacerbate the very Biden-era inflation Trump lambasted on the campaign trail, according to economists.  
There’s still much uncertainty around how and when such tariffs might be implemented. If they were to take effect, they would likely raise prices for American consumers and disproportionately hurt lower earners, economists said.
The typical U.S. household would pay several thousand more dollars each year on clothing, furniture, appliances and other goods, estimates suggest.

“It’s bad for consumers,” said Mark Zandi, chief economist at Moody’s. “It’s a tax on consumers in the form of higher prices for imported goods.”
“It’s inflationary,” he added.

He and other economists predict the proposed tariffs would also lead to job loss and slower economic growth, on a net basis.
The Trump campaign didn’t immediately respond to a request for comment from CNBC on the impact of tariffs or their scope.

How Trump’s tariff proposal might work

A tariff is a tax placed on imported goods.
Tariffs have been around for centuries. However, their importance as a source of government revenue has declined, especially among wealthy nations, according to Monica Morlacco, an international trade expert and assistant professor of economics at the University of Southern California.
Now, the U.S. largely uses tariffs as a protectionist policy to shield certain industries from foreign competition, according to the Brookings Institution, a think tank.
More from Personal Finance:Presidential election prompts Americans to ‘doom spend’Next U.S. president could face a tax battle in 2025How the ‘vibecession’ influences investors
Trump imposed some tariffs in his first term — on washing machines, solar panels, steel, aluminum and a range of Chinese goods, for example. The Biden administration kept many of those intact.
However, Trump’s proposals from the campaign trail are much broader, economists said.
He has floated a 10% or 20% universal tariff on all imports and a tariff of at least 60% on Chinese goods, for example. Last month, the president-elect suggested vehicles from Mexico have a tariff of 200% or more, and in September threatened to impose a similar amount on John Deere if the company were to shift some production from the U.S. to Mexico.
“To me, the most beautiful word in the dictionary is ‘tariff,'” Trump said at the Chicago Economic Club in October. “It’s my favorite word. It needs a public relations firm.”

How much tariffs cost consumers

A 20% worldwide tariff and a 60% levy on Chinese goods would raise costs by $3,000 in 2025 for the average U.S. household, according to an October analysis by the Tax Policy Center. Trump’s plan would reduce average after-tax incomes by almost 3%, according to the tax think tank.
Additionally, a 200% Mexico-vehicle tariff would increase household costs by an average $600, TPC said.
American consumers would lose $46 billion to $78 billion a year in spending power on apparel, toys, furniture, household appliances, footwear and travel goods, according to a National Retail Federation analysis published Monday.
“I feel pretty confident saying [tariffs] are a price-raising policy,” said Mike Pugliese, senior economist at Wells Fargo Economics. “The question is just the magnitude.”

The reason for these higher costs: Tariffs are paid by U.S. companies that import goods. The “vast majority” of that additional cost is passed on to American consumers, while only some of it is paid for by U.S. distributors and retailers or by foreign producers, said Zandi of Moody’s.
Philip Daniele, president and CEO of AutoZone, alluded to this dynamic in a recent earnings call.
“If we get tariffs, we will pass those tariff costs back to the consumer,” Daniele said in September.
The U.S. imported about $3.2 trillion of goods in 2022, for example, said Olivia Cross, a North America economist at Capital Economics. A back-of-the-envelope calculation suggests a 10% across-the-board tariff would be roughly equivalent to a $320 billion tax on consumers, Cross said.

Tariffs reduce economic growth and jobs

Of course, the financial fallout likely wouldn’t be quite that large, Cross said.
Trump’s plan could boost the strength of the U.S. dollar, and there may also be tariff exemptions for certain categories of goods or imports from certain countries, all of which would likely blunt the overall impact, Cross said.

A 20% universal tariff and 60% Chinese import tax would also generate about $4.5 trillion in net new revenue for the federal government over 10 years, according to the Tax Policy Center.
“The administration could take tariff revenue and redistribute to households via tax cuts in some form or another,” explained Pugliese of Wells Fargo.
Trump has proposed various tax breaks on the campaign trail. Additionally, tax cuts enacted by Trump in 2017 are due to expire next year, and tariff revenue may potentially be used to extend them, should Congress pass such legislation, economists said.
However, the typical U.S. household would still lose $2,600 a year from Trump’s tariff plan, even after accounting for an extension of the 2017 tax cuts, according to an analysis by the Peterson Institute for International Economics.

The U.S. economy would also likely suffer due to other tariff “cross currents,” Zandi said.
While U.S. companies that financially benefit from protectionist tariff policies may add jobs, the total economy would likely shed jobs on a net basis, Zandi said.
This is because countries on which the U.S. imposes tariffs would likely retaliate with their own tariffs on U.S. exports, hurting the bottom lines of domestic businesses that export goods, for example, Zandi said.
Higher prices for imported goods would likely also lead to lower consumer demand, weighing on business profits and perhaps leading to layoffs, he said.
In June, the Tax Foundation estimated Trump’s tariff plan would shrink U.S. employment by 684,000 full-time jobs and reduce its gross domestic product, a measure of economic output, by at least 0.8%.
Capital Economics expects the Trump administration would introduce tariffs — and a curb on immigration — in the second quarter of next year, the group said in a note Tuesday night. Together, those policies would cut Gross Domestic Product growth by about 1% from the second half of 2025 through the first half of 2026 and add 1 percentage point to inflation, it said. More