Judith M. Bardwick, Ph.D.
When people are scared and depressed for a long time, despair and fear replace confidence and optimism because there seems no way to regain control over what’s happening to you. The nation has been gripped by a sense of threat created especially by a reasonably sudden but permanent loss of economic security. That feeling of economic vulnerability has generalized for many people so they feel there’s no way for anyone to make themselves safe.
Feeling this way, people become preoccupied with trying to make sense out of the chaos of their life as if by understanding it, they could somehow control it. But it doesn’t work because, in despair, people discount good news and focus on the bad because that confirms their world view and assures them that their views are right.
Paradoxically, people who are profoundly scared seek out worst case examples because that confirms their worst fears and, unfortunately, reinforce them. The prolonged and sustained fear that is characteristic of a Psychological Recession assures that good news will be discounted while bad news confirms people’s worst fears and reinforces them as the stuff of reality. In other words, misery does love company. In this way, a Psychological Recession is self-fulfilling.
Perhaps the extreme example of this is today’s increased interest in the Rapture Index, a measure of all of earth’s catastrophes like earthquakes and floods and flu pandemics that some people attribute to God’s punishments of man’s sins.  In understandable but irrational ways, people who are frightened move ever forward toward panic.
Robert J. Samuelson, a columnist for Newsweek whom I’ve long admired, wrote a column explaining why the mass media often select a bad news perspective – it’s often more controversial and newsworthy – and concluded that all in all, people shouldn’t be upset by that apparent bias because, in his view, people just don’t pay a lot of attention to the media. 
Mr. Samuelson, people may not pay particular attention to any single source of news. But today people are barraged by what Steve Hardis calls “the echo effect” of contemporary communication. An idea or a point of view is picked up and given print or air time…and then it is repeated over and over and over in today’s multiplicities of media and the sheer repetition of it, the convergence of the cacophony of its echoes makes it “a fact.”
With the pervasiveness of today’s media, the “echo effect” of the same message trumpeted, debated, illustrated, and referred to by “experts” ends up strengthening the psychological factors over the objective facts. The idea that something might be a possibility or inference or idea or opinion…is transformed through obsessive, pervasive repetition into “a fact”.
All of us remember the thrilling mantra of the 1990s “new economy;” with the turn of a phrase all the old rules of prudent investment – diversification, dividends, profitability – were replaced by business models that assumed their concepts, alone, would create success and prosperity. In was no longer necessary, in the view of the “new economy” to build a successful enterprise.
In the new economy old rules were a major impediment and old fogies stuck with the NYSE while those “who got it” rushed to Nasdaq, and the “real players” quit their day jobs to become Day Traders. CNN, FOX, CNBC…filled every 24 hours with talking heads describing the breakthrough of the world wide economy and money that could speed through a wireless world in a nanosecond. Then the idea would get picked up by The Wall Street Journal, Fortune, Business Week…and ultimately it would be on the front page of the local newspapers’ Business section because no one wants to be left behind, the only dinosaur in a universe of space travel in which the only real impediment is too little imagination to leave the past back where it belongs and move, with giant steps into the unimaginable new economy.
When, as was inevitable, the boom collapsed, Nasdaq pretty much died, and the dot-coms disappeared into the hole of naïve failure, most people were truly shocked. The “echo effect,” and their temporary paper wealth, had cost them any amount of appropriate skepticism.
Today, the “echo effect” is having the reverse impact that it did during the boom years. Somehow, all the television stations end up playing the same video of the same plant that was closed, the same workers who were laid-off, the same children whose school was closed, and the same contract to outsource work to India or China…and the loop of information plays endlessly. The discourse of threat and gloom is never challenged; it is taken as a given and a fact.
A Psychological Recession is not just an idea; it is a real phenomenon with real consequences, all of them bad. And on the economic side, it is really dangerous when a Psychological Recession characterizes most people’s views and moods in an economy in which 2/3s of GDP  is based on consumer spending. Giving people little or no hope that their lives will, like those of their parents and grandparents, embody the American Dream of upward mobility is both stupid and politically dangerous.
 Haught, Nancy, “Keepers of rapture index say end is drawing near,” San Diego Union-Tribune, November 17, 2005, pg. E5.
 Samuelson, Robert J., “The media and bad economic news,” San Diego Union-Tribune, September 3, 2003, pg. B8.
 GDP means Gross Domestic Product