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
a recession in general is an economic retraction mostly brought on by a reduction in spending, typically people use it to describe the entire country as two consecutive quarters of a reduction in GDP. the stock market is people buying and trading equities. the stock market can be an indicator of a recession but doesn’t mean that people aren’t going to build an apartment building for example or hire an extra employee, or buy a car. there are multiple indicators , people right now are concerned with an inverted yield curve on bonds, the 2 year bond is paying more than the 10 year, that means people think we’ll have a recession in 2-3 years, not tomorrow, people in anticipation of that or whatever reason, no one knows why investors do anything and anyone that says that is flat out lying, want to divert out of stocks that pay dividends based on revenue because they think revenue will be down due to decreased spending and convert into cash or whatever. again, all this is based of historical patterns and analysis , which after the “great recession” i don’t think investors or analyst know what’s going on or how to act in this economy.
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