Filed under: Analyst reports, Forecasts, Bad news, Products and services, Consumer experience
It is hardly a surprise that a Wall Street Journal poll of economists finds them in a foul mood. Most believe that the financial troubles in the US will get much worse and that the housing market has yet to bottom.
According to the newspaper: “Three interrelated issues weighed on the economists’ minds. When asked what the biggest downside risk to their forecast was, 35% said further deterioration in the credit markets, while 25% stated it was a sharp drop in consumer spending and 13% stated continued housing weakness.”
The news raises the question of whether experts are “talking” the economy into a worse recession. Yesterday, George Soros said the current crisis could cost financial institutions nearly $1 trillion worldwide. Just a few months ago, many experts thought the US would avoid a recession totally.
The question is a reasonable one. When the press and economists make repeated public comments on how bad things are does it causes consumers to purchase less, worry more, and put more cash on the sideline?. No one knows, but given the psychology of fear no one should be surprised if the answer is “yes”.
In a recession, fear feeds on fear and consumers can freeze their spending nearly completely.
Douglas A. McIntyre is an editor at 247wallst.com.
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