America's 'boomcession' and what it means for Australia

Australia's economy is growing, unemployment is relatively low and many of the headline numbers look healthy. So why do so many households feel worse off?

That's the paradox behind the term "boomcession", a combination of boom and recession, used to describe an economy that is performing well overall while many people feel like they're stuck in a downturn.

Coined by economics writer Matt Stoller, the phrase has gained traction in the US. But does it also describe what's happening in Australia? Here's what the experts say.

What is a 'boomcession'?

"Boomcession" describes a sharp disconnect between strong macro-level indicators and the widespread financial strain felt by everyday households.

By conventional measures, Australian economic conditions remain relatively strong: output has continued to expand (GDP), equity markets have benefited from enthusiasm around artificial intelligence, and unemployment remains low by historical standards.

Yet, many households feel like they're in a recession. But why?

• Inflation expectations/anxiety remain elevated
• Interest rates are climbing
• Housing affordability is stretched
• Cost of everyday essentials continues to weigh on budgets

Mr Stoller, a research director at the non-profit American Economic Liberties Project, said "traditionally" the US economy was performing well.

"But ordinary people are saying they're not," he said.

US consumer confidence fell to a preliminary reading of 46.3 this month, according to the University of Michigan's closely watched consumer sentiment index.

If the lower-than-expected reading were to hold, it would mark yet another historically weak reading for sentiment, just shy of May's record-low reading of 44.8.

Independent economist Nicki Hutley says there's a similar disconnect in Australia, though she prefers the term "vibecession" to describe the mood.

"On the surface, the economy looks OK, if not buoyant," she says, pointing to economic growth of about 2 per cent and unemployment that remains low by historical standards.

"However, you don't have to look too far beneath the surface to understand why the average Aussie is grumpy.

"The 2025 interest rate cuts have been taken back; inflation has remained just high enough to erode any wages growth and households are focusing on the 'bill shock' items."

According to Mr Stoller, his boomcession model is to raise awareness of the real financial struggles those outside of America's wealthiest social classes face.

Put simply, the economy may be expanding, but the gains aren't evenly distributed. And for those who don't own stocks or have large financial cushions, a booming market doesn't translate into day-to-day security.

Boomcession description 'no longer fits' Australia

William Buck chief economist Besa Deda says while Australia did display some of the characteristics of a boomcession earlier this year, that description no longer fits as well as it once did.

"Earlier in the cycle, many households felt like they were in a downturn while the broader economy, housing market and share market looked surprisingly resilient," Ms Deda says.

"Households were grappling with higher living costs, rising mortgage repayments and stretched budgets, yet economic growth remained resilient, unemployment was low, house prices were rising and the share market was hitting fresh highs."

However, Ms Deda says that resilience is starting to fade as the full effects of higher interest rates work their way through the economy.

Economic growth is slowing, the labour market is softening, and asset markets are no longer providing the same support they once did.

Essentially, the gap between household experience and the headline economic data is narrowing.

Consumer sentiment remains subdued

While Australia may no longer fit the definition of a boomcession, households remain under pressure.

Consumer sentiment fell to 74.9 in October, its lowest level since mid-2024, reflecting ongoing cost-of-living pressures and concerns about the economic outlook.

The RBA has raised interest rates four times this year as underlying inflation has remained elevated, while higher fuel prices have also added to household budgets and flowed through to the cost of many goods and services.

Ms Deda says consumer sentiment is unlikely to recover meaningfully until households are convinced financial pressures are easing.

"That means greater confidence that interest rates have peaked and that relief is in sight through future rate cuts, alongside easing cost-of-living pressures and continued job security," she says.

Until then, the boomcession may be fading, but for many Australians, the feeling of living through one remains.