The Coming Anxiety Pandemic

Popular Economics Weekly


Americans’ confidence in their future is dropping substantially as they decide who to trust during the COVID-19 pandemic. Hence what Nobel laureate economist Robert Shiller has called the result of the loss of confidence—an anxiety pandemic.

Dr. Shiller’s predictions on financial behavior include a psychological element. As can be seen from the rising debate over masks, or when and how to open public spaces, the level of anxiety over this pandemic is already sky high.

This, unfortunately, will slow down any sustainable recovery that doesn’t take into account how consumers in particular react to the remedies being proposed to tame COVID-19. A good outcome doesn’t look good at the moment because of the mixed messages coming from on high—the federal government vs. states, Trump’s advisors vs. actual scientific experts.

“It is not good news when two pandemics are at work simultaneously,” Shiller said in a recent Project-Syndicate column. “One can feed the other. Business closures, soaring unemployment, and loss of income fuel financial anxiety, which may, in turn, deter people, desperate for work, from taking adequate precautions against the spread of the disease.”

The University of Michigan’s final April sentiment survey sank to a 7-year low of 71.8. The current conditions component bore the brunt of the deterioration, falling 33 points to 74.3.  Expectations posted a smaller decline, with that index falling just ten points, albeit to a lower level of 70.1.  The record low for the monthly Michigan headline index is 51.7, set 40 years ago, and that could be repeated.

Expectations for the recovery are now running all other the map. The White House has revised its estimate of coronavirus deaths from 100,000 to more than 200,000, while Washington state survey raised it latest estimate to 135,000 deaths, in part because of some states opening too early and thus ignoring White House guidelines of at least two weeks of declining infection rates before lifting stay-in-home orders.

Why so much confusion? Major economists are beginning to sound alarms.

Nobel economist Paul Krugman attributes the uncertainty of message to Trump and the Republican Party’s refusal to rely on scientists for advice.

”The disdain for experts, preference for incompetent loyalists and failure to learn from experience are standard operating procedure for the whole modern G.O.P.,” he said recently.

Obama economic advisor Austin Goolsbee said as much on the struggles to provide recovery money:

“The administration has been adamant that it is not required to be fully transparent or accountable in handling these (recovery) funds…They undermine the credibility of the crisis response, which the government will desperately need soon enough.”

Add to this the latest employment numbers. Private payroll data service ADP just predicted a loss of 20 million payroll jobs in its April private sector survey.



In other words, we will be seeing much darker days ahead if the American public cannot trust the words of our leaders. They cannot unite if they are listening to different voices. “It’s not about red or blue states,” New York Governor Andrew Cuomo has been saying at his daily press conference. “It’s not about ‘you’ or ‘me’, it’s about ‘we.”

Harlan Green © 2020

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About populareconomicsblog

Harlan Green is editor/publisher of, and content provider of 3 weekly columns to various blogs--Popular Economics Weekly and The Huffington Post
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