Are We Talking Ourselves Into A Recession?

Are We Talking Ourselves Into a Recession

You hear it all the time on financial media. “Consumer Confidence is low.” It describes how people think that something terrible is going to happen to the economy, and it affects their spending behavior.

Confidence is a feeling, not a fact or a physical item. However, this emotional reaction has serious implications on the economy, as well as your bottom line.

Not only is consumer confidence an emotional concept, but it is also contagious. Sometimes having it makes other people have it, too. Other times not having it makes people lose theirs also.

So, does that mean when we hear things like, “consumer confidence is low,” and the “stock market was down XX points today,” that we are talking ourselves into a recession?

Recessions are an economic reality. They occur when the economy is out of balance in some way or operating inefficiently with its resources. In many ways, recessions get an economy back on track. So, in some ways, we should be grateful for a downturn. However, if you are one of the people caught in an economic correction and lose your job or your livelihood, you likely have a different opinion of it.

There are objective or physical forces that can affect whether a recession occurs. For example, natural disasters can disrupt the flow of goods, whether it’s a Hurricane that stops logistics or a drought that kills crops. Also, human-made disasters like wars can affect the economy, too.

However, there are also subjective forces that affect the likelihood of a recession. Studies have shown that things like the weather or the win or loss of the British National Soccer Team in the playoffs can affect how the stock market performs. And, yes, things like consumer confidence.

This episode of The Intuitive Customer explores how much influence our emotions have on things like the stock market or the economy. We also talk about how confidence—or the loss of it—can be contagious and wreak havoc on both our business and personal bottom line. Finally, we use what we have learned through past recessions to strategize for you to come out ahead of the competition on the other side if we do have a recession. 

 

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