CBS News
Is the U.S. in a “vibecession”? Here’s why Americans are gloomy even as the economy improves.
The labor market is roaring ahead, wages are rising and inflation is slowing — all key metrics that economists point to as showing a resilient and strong U.S. economy. The problem is Americans aren’t feeling it.
The disconnect between gloomy consumers and upbeat economic data has sparked plenty of debate over the gap, with some experts terming it a “vibecession.” The idea behind the term is that Americans are basing their economic views on “feelings,” rather than on what’s actually happening in their financial lives.
For instance, inflation has come down a long way from its 40-year peak of 9.1% in June 2022. But about 3 in 4 consumers in swing states said they believe inflation is going the “wrong way,” according to a recent Wall Street Journal poll.
But there may be more than vibes behind Americans’ dour views, such as financial pressures that aren’t necessarily captured by data like the consumer price index, which measures the pace of inflation. For instance, the CPI doesn’t capture the impact of higher borrowing costs ushered in by the Federal Reserve’s 11 rate hikes to battle the hottest inflation in 40 years.
In other words, consumers are paying more for credit card debt and loans, but that’s not directly reflected in the CPI, which measures commonly purchased goods and services like groceries and clothing. Credit card debt reached a record $1.13 trillion in the fourth quarter, the highest since the Fed started tracking it in 1999.
“There are things that are intentionally excluded from the CPI — credit card costs are not in it,” noted Kayla Bruun, senior economist at Morning Consult. “It’s a big burden on the cost of living.”
It’s an issue that was underscored by former Treasury Secretary Larry Summers in a February research paper, with Summers and his co-authors pointing out that borrowing costs have surged “at rates they had not reached in decades.” That is boosting anxieties among Americans about the cost of financing major purchases, from cars to houses, the paper noted.
Consumers are likely going to cope with high borrowing costs for a while longer. While the Fed is expected to cut interest rates later in 2024, recent economic data and persistently sticky inflation has prompted some economists to forecast that the cuts could come later in the year.
One Fed official last week raised the possibility the central bank may not cut interest rates at all in 2024, which suggests consumers and businesses may not get much relief on the borrowing front anytime soon.
Inflation and loss aversion
The pace of inflation will get a reality check on Wednesday, when the latest consumer price index data will be released. Economists expect prices in March rose 3.4% on an annual basis, reflecting a slight uptick from the prior month’s 3.2% rate, according to financial data firm FactSet.
While inflation has undeniably eased from its recent 2022 peak, inflation seems to moving sideways, according to a new report from Morning Consult. The recent inflation data is also higher than the Fed’s goal of returning to an annual inflation rate of 2%, and Americans continue to point to the issue as a top economic concern.
Some economists have pointed to wages that are now growing faster than the rate of inflation as a reason Americans should feel positive about the economy. But that ignores how consumers view prices — and the psychological impact of loss aversion, or why losing something (or paying more money for goods or services) makes a bigger impact than the equivalent gain, Bruun said.
“Consumers seem to be more bothered by prices than they feel the benefits of their wages increasing, psychologically,” Bruun noted. “My team’s theory on this is it comes down to loss aversion: you feel the sting of having to part with your money rather than the boost in your income.”
And Americans may be describing inflation as going in the “wrong” direction, even though it is in fact receding, because of their experiences with making purchases, Bruun noted.
“Consumers look at prices and see prices are up, and if you are asked, ‘Is inflation up or down from a year ago?’ they know prices are up from a year ago, and so they’ll say, ‘Prices are going up, and that means things are getting worse’,” she noted.
Even though inflation is cooling, prices are continuing to rise, albeit at a slower pace than in the post-pandemic inflationary surge. It’s likely that consumers will eventually get used to these higher price levels, but that could take some time, Bruun added.
“When people realize, ‘Okay this is what things cost now’ and realize they can afford it,” the gap between economic data and Americans’ views on the economy could close, she predicted.
CBS News
Tajikistan nationals with alleged ISIS ties removed in immigration proceedings, U.S. officials say
When federal agents arrested eight Tajikistan nationals with alleged ties to the Islamic State terror group on immigration charges back in June, U.S. officials reasoned that coordinated raids in Los Angeles, New York and Philadelphia would prove the fastest way to disrupt a potential terrorist plot in its earliest stages. Four months later, after being detained in Immigration and Customs Enforcement (ICE) facilities, three of the men have already been returned to Tajikistan and Russia, U.S. officials tell CBS News, following removals by immigration court judges.
Four more Tajik nationals – also held in ICE detention facilities – are awaiting removal flights to Central Asia, and U.S. officials anticipate they’ll be returned in the coming few weeks. Only one of the arrested men still awaits his legal proceeding, following a medical issue, though U.S. officials speaking on the condition of anonymity to discuss the sensitive proceedings indicated that he remains detained and is likely to face a similar outcome.
The men face no additional charges – including terrorism-related offenses – with the decision to immediately arrest and remove them through deportation proceedings, rather than orchestrate a hard-fought terrorism trial in Article III courts, born out of a pressing short-term concern about public safety.
Soon after the eight foreign nationals crossed into the United States, the FBI learned of the potential ties to the Islamic State, CBS News previously reported. The FBI identified early-stage terrorist plotting, triggering their immediate arrests, in part, through a wiretap after the individuals had already been vetted by U.S. Customs and Border Protection, law enforcement sources confirmed to CBS News in June.
Several months later, their removals following immigration proceedings mark a departure from the post-9/11 intelligence-sharing architecture of the U.S. government.
Now facing a more diverse migrant population at the U.S.-Mexico border, a new effort is underway by the Department of Homeland Security, Department of Justice and the Intelligence Community to normalize the direct sharing of classified information – including some marked top-secret – with U.S. immigration judges.
The more routine intelligence sharing with immigration judges is aimed at allowing U.S. immigration courts to more regularly incorporate derogatory information into their decisions. The endeavor has led to the creation of more safes and sensitive compartmented information facilities – also known as SCIFs – to help facilitate the sharing of classified materials. Once considered a last resort for the department, Secretary Alejandro Mayorkas has sought to use immigration tools, in recent months, to mitigate and disrupt threat activity.
The immigration raids, back in June, underscore the spate of terrorism concerns from the U.S. government this year, as national security agencies point to a system now blinking red in the aftermath of the Oct. 7 attacks by Hamas on Israel, with emerging terrorism hot spots in Central Asia.
A joint intelligence bulletin released this month, and obtained by CBS News, warns that foreign terrorist organizations have exploited the attack nearly one year ago and its aftermath to try to recruit radicalized followers, creating media that compares the October 7 and 9/11 attacks and encouraging “lone attackers to use simple tactics like firearms, knives, Molotov cocktails, and vehicle ramming against Western targets in retaliation for deaths in Gaza.”
In May, ICE arrested an Uzbek man in Baltimore with alleged ISIS ties after he had been living inside the U.S. for more than two years, NBC News first reported.
In the past year, Tajik nationals have engaged in foiled terrorism plots in Russia, Iran and Turkey, as well as Europe, with several Tajik men arrested following March’s deadly attack on Crocus City Hall in Moscow that left at least 133 people dead and hundreds more injured.
The attack has been linked to ISIS-K, or the Islamic State Khorasan Province, an off-shoot of ISIS that emerged in 2015, founded by disillusioned members of Pakistani militant groups, including Taliban fighters. In August 2021, during the U.S. military withdrawal from Afghanistan, ISIS-K launched a suicide attack in Kabul, killing 13 U.S. service members and at least 170 Afghan civilians.
In a recent change to ICE policy, the agency now recurrently vets foreign nationals arriving from Tajikistan, Uzbekistan and other Central Asian countries, detaining them while they await removal proceedings or immigration hearings.
Only 0.007% of migrant arrivals are flagged by the FBI’s watchlist, and an even smaller number of those asylum seekers are ultimately removed. But with migrants arriving at the Southwest border from conflict zones in the Eastern Hemisphere, posing potential links to extremist or terrorist groups, the White House is now exploring ways to expedite the removal of asylum seekers viewed as a possible threat to the American public.
“Encounters with migrants from Eastern Hemisphere countries—such as China, India, Russia, and western African countries—in FY 2024 have decreased slightly from about 10 to 9 percent of overall encounters, but remain a higher proportion of encounters than before FY 2023,” according to the Homeland Threat Assessment, a public intelligence document released earlier this month.
A senior homeland security official told reporters in a briefing Wednesday, that the U.S. is engaged in an “ongoing effort to try to make sure that we can use every bit of available information that the U.S. government has classified and unclassified, and make sure that the best possible picture about a person seeking to enter the United States is available to frontline personnel who are encountering that person.”
Approximately 139 individuals flagged by the FBI’s terror watchlist have been encountered at the U.S.‑Mexico border through July of fiscal year 2024. That number decreased from 216 during the same timeframe in 2023. CBP encountered 283 watchlisted individuals at the U.S.-Canada border through July of fiscal year 2024, down from 375 encountered during the same timeframe in 2023.
“I think one of the features of the surge in migration over recent years is that our border personnel are encountering a much more diverse and global population of individuals trying to enter the United States or seeking to enter the United States,” a senior DHS official said. “So, at some point in the past, it might have been primarily a Western Hemisphere phenomenon. Now, our border personnel encounter individuals from around the world, from all parts of the world, to include conflict zones and other areas where individuals may have links or can support ties to extremist or terrorist organizations that we have long-standing concerns about.”
In April, FBI Director Christopher Wray warned that human smuggling operations at the southern border were trafficking in people with possible connections to terror groups.
“Looking back over my career in law enforcement, I’d be hard-pressed to think of a time when so many different threats to our public safety and national security were so elevated all at once, but that is the case as I sit here today,” Wray, told Congress in June, just days before most of the Tajik men were arrested.
The expedited return of three Tajiks to Central Asia required tremendous diplomatic communication, facilitated by the State Department, U.S. officials said.
Returns to Central Asia routinely encounter operational and diplomatic hurdles, though regular channels for removal do exist. According to agency data, in 2023, ICE deported only four migrants to Tajikistan.
Robert Legare and
contributed to this report.
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