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What is a recession anyway? I’ll spare you a debate over the ”official” definition, but basically it’s a protracted period where people and businesses spend less money, which causes the economy to shrink. A shrinking economy is bad for everybody: people lose jobs, businesses lose money, bankruptcies...

What is a recession anyway? I’ll spare you a debate over the ”official” definition, but basically it’s a protracted period where people and businesses spend less money, which causes the economy to shrink.

A shrinking economy is bad for everybody: people lose jobs, businesses lose money, bankruptcies happen, the stock market drops and lenders stop lending.

Whether a recession will happen is influenced by whether people think a recession will happen. It’s a self-fulfilling prophecy, according to Robert Schiller:

While there are many reasons behind the increasing chances of an economic downturn, from inflation to the war in Ukraine, Shiller said that he believes a recession may become a “self-fulfilling prophecy” as consumers, investors, and companies prepare for the worst and slow down their spending.

“The fear can lead to the actuality,” the famed economist argued.

Recession predictions have flooded Wall Street to start the year, with everyone from JPMorgan Chase CEO Jamie Dimon to billionaire investors like Carl Icahn sounding the alarm. The consistent doomsday forecasts coupled with nearly four-decade high inflation have many consumers feeling pessimistic.

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