If a prediction of a recession causes the market to crash, can it be said that the prediction itself is part of the cause of the recession? Like a self-fulfilling prophecy?

Question

If a prediction of a recession causes the market to crash, can it be said that the prediction itself is part of the cause of the recession? Like a self-fulfilling prophecy?

In: Economics

Answer 1

In addition to a lot here, the timing of a recession is difficult to predict with one metric. The 10-2 yield inversion being used to “predict” a recession typically occurs 2 years before a recession and we’re only talking about a handful of times it’s happened so it’s not as simple as due to X, Y will follow. It’s something to watch for sure but don’t assume because it happened 5 times previously that it’s inevitable now.