Over the past year or so, there has been a lot of discussion on whether or not a recession is looming for the United States. Most economists aren’t in full agreement on whether a recession is likely to occur, but a professor from North Carolina State University (NCSU) has suggested that we should look beyond the usual economic factors that indicate a recession, and start paying more attention to the power of our words.
Can we talk our way into a recession?
Dr. Mike Walden, a William Neal Reynolds Distinguished Professor and Extension Economist in the Department of Agricultural and Resource Economics at NCSU argues that widespread talk of a recession can potentially cause a recession to occur sooner.
Of course, a recession can’t just be spoken into existence, but when other indicators are present, talking about a recession carries more weight.
As outlined in a WRAL TechWire article, when addressing the question of if we can talk our way into a recession Dr. Walden explains, “I think the answer is a ‘qualified yes’. The qualification is there needs to be an ignitor. That is, there needs to be some real trouble in the economy to start the worry. Concerns about recessions don’t just appear out of thin air. Once some valid worry does appear, widespread talk about it can ‘fan the flames’ and potentially make the recession come sooner or cause it to be deeper.”
This ties into our innate fear of the unknown. Dr. Walden goes on to say, “The objective should be to evaluate how real and important any fear is. For the economy, this means you must decide what to look at and who to listen to for projections about where we’re headed.”
While the reality of an upcoming recession remains unclear, this is a conversation we’ll be visiting frequently in the coming months. As economists continue to forecast their predictions, we’ll cover them here and get your feedback as well.
You can read Dr. Walden’s full article here.