By Futurist Thomas Frey

A predicted recession can reduce spending before a recession exists. A predicted shortage can create the shortage. Tomorrow frequently reaches backward and rearranges today.

Imagine a perfectly healthy bank. Its books are sound, its loans are performing, and its customers have no real reason to worry. Then a rumor starts to spread through town that the bank is in trouble. Customers rush to withdraw their savings. Because no bank keeps all its deposits in cash, it cannot pay everyone at once. The bank fails.

The sociologist Robert Merton used exactly this story to illustrate an idea he popularized in the 1940s: “The prophecy of collapse led to its own fulfillment.” The bank was fine until the prediction arrived. The future event, which had not yet occurred, was already the most powerful force acting on the present.

I’ve come to believe this is one of the most underappreciated ideas in business, economics, and technology. We tend to think of the future as something that happens after the present. In practice, expectations about the future reach backward and reshape the decisions we make today, which in turn determine what the future becomes.

When a Mood Becomes a Recession

Economists have spent decades arguing over whether consumer pessimism causes downturns or merely reflects them. The evidence suggests it does both. The University of Michigan’s Consumer Sentiment Index, which asks people where they expect the economy to be a year from now, generally tracks changes in consumer spending. And as NYU economist Jess Benhabib put it in a Richmond Fed analysis, “Pessimistic expectations can generate recessions. Optimistic expectations can generate booms.”

Consider the recession of 1990 to 1991. When the economist Robert Hall went looking for the fundamental shock that caused it, he couldn’t find one. Instead, he described a cascading wave of negative responses, possibly triggered by the oil price spike following Iraq’s invasion of Kuwait, in which consumers reacted as though their resources had permanently shrunk. Fear of the downturn helped manufacture the downturn.

MIT researchers George-Marios Angeletos and Chen Lian gave this feedback loop a name: the “confidence multiplier.” As output falls, consumers and firms grow more pessimistic, which cuts spending further, which erodes confidence further. A prediction becomes a mechanism.

The reverse can also happen. After September 11, 2001, many economists feared a prolonged slump because people would stay home out of fear of another attack. Instead, the recession ended just two months later, one of the shortest in American history. Economist Robert Shiller attributed some of that surprising rebound to a shift in national sentiment: a public determined to carry on with normal life.

Sometimes the fear of running out creates the very shortage we dread. The future becomes real simply because enough people believe it.

The Shortage That Nobody Needed

If a recession can be partly summoned by belief, so can a shortage. In the spring of 2020, millions of shoppers cleared shelves of toilet paper, even though the supply chain for it was fundamentally intact. Economist Kilian Rieder noted that shortages can sometimes occur only because of panic buying, and he made a point that I find fascinating: from each individual customer’s point of view, stockpiling was a perfectly rational strategy. If you believe the shelves will be empty next week, buying extra today is the sensible move. The collective result, of course, was empty shelves.

Rieder drew a striking parallel to the 19th-century runs on the Bank of England, where financial market participants rushed to exchange assets for banknotes because everyone feared being left empty-handed. What finally stopped those runs wasn’t higher rates or rationing, which were largely ineffective and sometimes seemed to intensify the panic. It was a government announcement that the Bank’s reserve requirement would be suspended, which made the panic unnecessary. The lesson, Rieder argued, is that the best response to a self-fulfilling shortage is to make panic blatantly pointless, through transparency about actual stock levels and supply flows.

The Media as a Prophecy Amplifier

Here’s where the story gets more interesting for the world we’re building. For a sentiment shift to move an entire economy, millions of people have to change their beliefs at roughly the same time. Something has to coordinate those beliefs.

Economist Kristoffer Nimark has argued that the news media plays exactly that role. In research examining the Great Recession, he and his colleagues found that roughly three-quarters of economic news coverage in 2009 focused on just two sectors, autos and finance, even though conditions in other sectors weren’t nearly as dire. Everyone absorbed the same alarming headlines and became more pessimistic together. By their calculations, the existence of a news media amplified economic fluctuations to more than four times what a model without media would predict.

Now ask yourself what happens when forecasting stops being a handful of analysts and a few news cycles, and becomes millions of AI systems issuing personalized predictions to billions of people simultaneously. A predictive model telling a hundred million households that a downturn is coming isn’t just observing the future. It’s participating in it.

The Prophecies We Choose to Fulfill

Not every self-fulfilling prophecy is a warning. Some are deliberate commitments that organizations build entire strategies around. Moore’s Law, the observation that the number of transistors on a chip doubles roughly every two years, is often described as a self-fulfilling prophecy: the argument is that an industry planning its research and investment around the expectation helped keep it true.

The same dynamic appears in classrooms. In the famous Pygmalion studies, teachers were told that a random selection of students were expected to show exceptional growth. Those randomly chosen students ended the year with significantly higher test scores, apparently because expectations changed how teachers interacted with them.

This is the hopeful side of the phenomenon. If tomorrow can reach backward and rearrange today, then we’re not merely victims of our forecasts. We can deliberately choose which futures to make credible.

Tomorrow’s forecasts won’t just predict events—they’ll trigger them, forcing us to treat every major prediction as an intervention with consequences.

My Prediction: Forecasts Become Interventions

Here’s where I think this is heading. Within the next decade, any prediction published at scale, whether about the economy, a stock, a housing market, or a product shortage, will be treated less like a weather report and more like a policy action. Regulators, companies, and media organizations will have to ask a new question before releasing a forecast: what will happen to the thing we’re predicting once people know we predicted it?

I expect a new profession to emerge around this question, something like “expectations management,” combining economics, communication, and behavioral science. Its practitioners will design forecasts the way pharmaceutical companies design drugs, studying side effects before release. They’ll also learn to counter harmful prophecies the way the Bank of England eventually did: not by denying the fear, but by making the feared outcome visibly unnecessary.

Individuals will need a version of this skill too. Every time you hear a confident prediction about the economy, your industry, or your own career, you’re hearing a force that may act on the very thing it describes. The future you plan for tomorrow quietly shapes the choices you make today.

The most powerful events in your life may be the ones that haven’t happened yet. The only real question is whether you chose to invite them.

Related Articles

• “Talking Ourselves into a Recession” — Federal Reserve Bank of Richmond, Econ Focus — richmondfed.org/publications/research/econ_focus/2019/q4/feature1
• “What We May Learn from Historical Financial Crises to Understand and Mitigate COVID-19 Panic Buying” — CEPR / VoxEU — cepr.org/voxeu/columns/what-we-may-learn-historical-financial-crises-understand-and-mitigate-covid-19-panic
• “Self-Fulfilling Prophecy” — Wikipedia — en.wikipedia.org/wiki/Self-fulfilling_prophecy

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