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

The way you phrased the question, “if prediction *causes* a market recession, is the prediction part of the cause?” Yes. Yes it is. By definition.

Instead, “do predictions cause market crashes?” No, probably not. People make predictions every day. It probably balances-out on average.