Are we thinking ourselves into a recession? How predictions and doomsaying can affect real economic behavior

• Almost 80% of consumers surveyed expect bad times in the year ahead for business conditions.
• A survey by the Conference Board of CEOs reports that their confidence is at the lowest level since the pandemic began in 2020.
• About 20% of the CEOs surveyed expected economic conditions to improve over the next six months, and
• 60% thought they would get worse.

But this recession talk could lead to a recession becoming a self-fulfilling prophecy.

• The economic headwinds are very real. Oil prices are up 60% this year, while gas prices are up over 50%.
• Yet, what happens in the economy arises from subjective evaluation of how things will go in the future. Those evaluations are informed by data, not determined by them.
• Fear can lead to economic difficulty. When we are consumed by recession talk, it can become more likely.
• Businesses have become much more concerned about the outlook due to the rising cost of living, drop in demand, and increasingly aggressive interest rates.