Stuck in Neutral? Reset the Mood

Shiller, R. (2010) Stuck in neutral? Reset the mood. Retrieved March 6, 2010 from: http://www.nytimes.com/2010/01/31/business/economy/31view.html

This article, which was written by Yale economics professor, Robert Shiller, discusses how the mood on the consumer and businesses are affecting the economic recovery. Fear and pessimism are important factors that drive the economy and according to recent polling data the author quoted, two-thirds of Americans feel that economic recovery will not start for two or more years. Banks are still not lending much now because of their reduced tolerance for risk and because of the uncertain future. The ability for businesses to borrow to fund growth is one of the main keys to economic recovery. The pessimism regarding the economy can become a self-fulfilling prediction, which will result in a delayed recovery and further slow things down. This subject is important to managers because it affects most businesses. It is important for managers to protect the assets of their business, but in order to grow, and survive, it important for managers to find a happy medium between being overly conservative and too aggressive in seeking new ways to do business and to grow. At the same time, it is going to take some loosening of regulations at the banks, which managers will need to push for as well.