John Bunyan was serving a prison sentence in England for holding illegal religious services when he began writing “The Pilgrim’s Progress.” It is a book that, without prequels or sequels, has quietly remained in print for 337 years.
Included in the book is his description of a man trying to free himself from the muck and mud of a swamp. Weighted down, though, he is unable to do so.
Bunyan called the swamp the “Slough of Despond,” and for many it is the perfect way to describe our bogged-down economy as it struggles, year after year, to free itself from the downward pull of the Great Recession.
“The Pilgrim’s Progress” is religious literature, and the poor guy in the Slough of Despond was weighed down by the knowledge of his sins. Our economy is a secular construction, of course, and sins do not really play a major role in it. Knowledge, on the other hand, plays a very important role in all areas of the economy, with the possible exception of economic policy.
The U.S. Commerce Department recently released the Gross Domestic Product data for second quarter and it reflects the economy’s continuing struggle to regain its footing and get moving again. An annualized growth rate of 2.3 percent isn’t bad, but it isn’t robust, either. The GDP estimate for first quarter was revised to show a .06 percent gain rather than the economic contraction originally reported.
The unexciting GDP data becomes more informative when viewed in the light of the economic situation portrayed in the New York Federal Reserve’s “Survey of Consumer Expectations.” What made the news was that the latest consumer expectations for future household spending growth was at its lowest level since the survey began in 2013.
What should have been attracting our attention all along, though, wasn’t that drop in expectations so much as the dreary sameness of consumer expectations revealed in this survey. When you look at the past few years of housing, income and spending data in graph form, what we see, aside from the usual data collection squiggles, are straight lines — no decline but, more importantly, no improvement. Month after month, it’s the same story.
The economy could be worse, certainly. But the expectation that things will not get better reflects a despondent society quietly accepting its fate. Whatever else American economy is, its hallmark has been the immodesty of its dreams and expectations. Quietly accepting that things couldn’t be changed was for countries that we left behind.
Expectations play an important role in economics and are a key element in growth and prosperity. They also provide not only the driving force but also the calculus for financial markets.
When it comes to measuring the tangible or visible impact of expectations on our economic growth, though, we have a lot to learn. What we do know though is that there is a direct link between expectations and achievement.
Teachers and sports coaches are very aware of this. One of the things that a coach tries to instill in a basketball team, for example, is that each time they step out onto the court they should expect to win the game. Teachers also recognize that a student’s expectations are a major factor in student achievement. And one of the things that so many good teachers have in common is that they raise their students’ expectations for themselves.
Motivational speakers, too, have long recognized the cause-and-effect link between expectations and behavior. Often they will summarize this point by reminding their audience of a basic rule of success: “Whether you think you can or think you can’t, you’re right.”
Our self-expectations are a partly a product of others’ expectations of us — from parents, family members, and friends; from society and its institutions; and from others such as coaches and teachers who play a significant role in our development. This can be a complex psychological mix of forces, but the overarching theme is that we don’t want to disappoint them — and tend to match our effort to their expectations for us.
The federal government is very aware of the importance of expectations, but it generally limits its actions to “happy talk” about the economy, spiced occasionally with new programs that will make our lives easier. Neither action seems effective enough to change consumers’ outlook. Most consumers tune out government happy talk, and most government programs are narrowly targeted, with insufficient scope to affect our overall outlook.
Americans are not all despondent, thank goodness, but it is clear from the data that our low expectations are weighing us down, making it difficult for us to escape from the slough. And until those expectations are addressed directly, that is where we’ll stay.
James McCusker is a Bothell economist, educator and consultant. He also writes a column for the monthly Herald Business Journal.
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