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

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

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

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Pessimistic talk

  • 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.

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  • 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.

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Americans’ feelings about the economy are off the charts.

  • The airline industry is facing the problem of not having enough staff instead of not having enough customers.
  • Nike had higher earnings than analysts expected.
  • For households, this makes some sense. Many Americans are in a decent personal financial situation: They have seen increased home equity and are sitting on savings accumulated during the worst of the pandemic.

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