General thesis: The present economic climate and its depiction by the media has generated a psychological climate of depression, anxiety, helplessness, defeatism, and vulnerability. This feeling is pervasive and behaviorally contagious. Concepts of resilience can be used to build consumer confidence, trust, optimism, and effective decision-making.
Processes: As in clinical states of depression, people view the present economic climate as pervasive, personalized, and permanent. As in anxiety they may behave in hysterical, histrionic, avoidant, and self-defeating ways.
When in fact: Like clinical depression, periods of economic recession are cyclical. Reactions to recession need not be rigid and pre-determined but can include a range of options. Consumers need to overcome feelings of helplessness and to recognize opportunities, while, at the same time, embracing reasonable safeguards and defensive maneuvers. Just as we can ward off depression and anxiety by psychological defenses and effective problem-solving, so we can defend against self-defeating investment behaviors. While Greenspan accurately warned against irrational exuberance, we now need to avoid irrational dismay. During both bull and bear markets the intelligent and emotionally balanced investor finds a middle ground between the horns of euphoria and depression. We need a psychological Abilify to combat bipolar investor syndrome.
