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
If it were that shallow, yes. But there is a ton of real data, visible to all investors, that goes into that prediction. So in reality it is the actual data about economic performance that leads to the recession.
The prediction is a sort of self fulfilling prophecy. However a prediction of a recession will not do much unless all the analysts in the market also make the same prediction. In addition people will be looking for some sort of trigger in addition to having predicted the recession. So if there is some sort of trigger and nobody predicts a recession then there will not be one yet. However if at some later point you get the same trigger but the majority of the market does predict that the recession is close it will trigger it and cause a recession.
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