In the last Weekend Briefing of the year, here’s a look at why the “vibecession” – the idea that the economy is doing great and people are just imagining their hardships – is misleading. Don’t forget to subscribe to the Glossy Podcast for interviews with fashion industry leaders and Week in Review episodes, and the Glossy Beauty Podcast for interviews from the beauty industry. –Danny Parisi, sr. fashion reporter
Nike’s business suffers
For much of this year, there was a consensus that things were not going well in the American economy. Talk of a recession was common, inflation made everything more expensive and wages stagnated. But in the last months of the year, a new idea emerged, that of the “vibecession.” According to the vibecession theory, the economy is doing just fine and people just feel like things are bad, even though, in real terms, they’re not.
The primary metric proponents of the vibecession theory point to are the relatively low levels of unemployment. As of November, the unemployment rate was hovering at around 3.7%, certainly a low number.
But a survey of some of the biggest companies in fashion shows that, certainly, something is off. Both Farfetch and Matches were sold for pennies on the dollar. Companies across the luxury industry and other parts of fashion have reported declining sales. Even Nike, one of the biggest apparel companies in the world, announced last week that it was planning to cut hundreds of jobs, reduce the number of products it sells and rely more on automation to reduce costs thanks to declining sales. The company’s revenue rose only 1% in the last quarter — this figure does not account for currency exchange rates, however, so it’s likely negative. Within Nike, some of its brands are doing worse than others. For example, Converse saw its sales drop by 11% in the last quarter.
With layoffs and poor sales reported across the industry, it’s no wonder that consumers perceive this to be a difficult time — since it clearly is. Even the metric of low unemployment doesn’t seem to be holding for long. More than 50 major companies laid off workers this year, including Allbirds, Etsy, Kohl’s, Gap, Amazon, Walmart and Neiman Marcus. Adding to consumer sentiment that the economy isn’t working in their favor were controversial statements by Australian real estate CEO Tim Gurner who was widely criticized for his public comments on the unemployment rate. According to Gurner, as the rate is too low, companies will have to start firing people to keep workers feeling dependent and powerless. He later apologized.
Meanwhile, analysts like Shirley Lin of Brooklyn Law School have spoken about how companies lay people off close to the holidays because it makes their financials look better to investors at the end of the calendar year. The sentiment among corporate leaders that people are expendable and livelihoods can be taken away to make the bottom line look better is certainly not sending a message to American consumers that the economy is benefitting them.
Ad position: web_incontent_pos1
When you look past the simple metric of unemployment, there are many other indicators that we are in a crisis right now. On December 15, the federal government announced that homelessness had increased 12%, a dramatic jump that puts the homelessness rate at a record level. Many of the 70,000 people who became homeless in the last year were homeless for the first time. The increased cost of food and groceries has put more pressure on people’s spending, leading more Americans to experience food insecurity this year.
While it’s true that some measures of economic performance, including unemployment, have improved — inflation has finally slowed from a high of 9% down to 3% — the damage has been done. Increases in rent prices that were jacked up through the last year may have slowed, but prices haven’t gone down. And overall, people on the streets, high prices and low wages are real threats to people’s prosperity and not just a TikTok-induced delusion.
