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‘We could talk ourselves into a recession,’ one Fed official says



Now it is May, and according to most measures, the country has returned to normal. So, why did the dark cloud go by so fast?

Increasingly, economic observers are wondering whether uncertainty and pessimism, captured in a series of regularly published surveys that tend to be grouped under the "feeling" of the term soft, could be driving economic performance more than it used to. do.

On Wednesday, the president of the Richmond Federal Reserve, Tom Barkin, delivered a speech in which he advances this theory, noting the impact on business confidence caused earlier this year by factors such as the closure of the government and trade war. The risk: consumers could delay large purchases and companies could cancel expansion plans, creating a spiral that the economy could not self-correct.
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"We could become a recession," Barkin said. "Some economists have studied the dissemination of information from a disease perspective, where the information is slowly disseminated at the beginning, but quickly gains strength, I would say that in the current climate of the media, the & # 39; disease & # 39; it spreads faster. "

The economic concerns of the end of 2018 did not end in a slowdown this time, thanks in part to the help of the Federal Reserve's switch to patience to raise interest rates. But Barkin is concerned that weak expectations may become a self-fulfilling prophecy in the future.

The economy is more subject to variations in sentiment now, Barkin said, because both businesses and consumers are getting nervous after a recovery that will soon become the longest recorded, and smartphones allow everyone to absorb every news economic several times a day.

The Oxford Economics chief economist, Greg Daco, and University of Oregon economics professor Tim Duy also warned of a "recession bias" among stock analysts, which could make the US economy. UU It remains basically healthy.

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