The Great Expectations Recession

Posted on July 09,2014 by iamjohndroberts

If you're worried about the future, you're in good company. But it isn't company that's good for you. Not only are we still in a stubborn economic recession, we're in an expectations recession.Danger expectations

Don't forget what your broker says: Past performance is no guarantee of future returns. This is usually a warning to prevent inflated expectations. But there is little optimism in the news that's not countered by skepticism. We're in a boom that may be a bubble. Consider these few data points.

  • "...young people today expect to work more, achieve less, and have fewer children [compared to a 1992 Wharton study].
  • "For all of that work and sacrifice of family, recent grads don't expect to rise as high in their careers. Stewart Friedman, a Wharton professor who directed the study, says that it's part of a general trend toward lower aspirations in work and family lives."
  • "The majority of college graduates believe that their generation will not do better than the one that came before them."
  • "Not even half expect to have more financial success than their parents; one in five expect to do less well than their parents and another 31 percent say they expect to do equally well."

And the Federal Reserve offers,

  • "...the large, unexplained shock to income expectations might suggest a permanent change in households' views - a phenomenon that would continue to weigh against a recovery in consumer spending."

Our own worst enemy, or is it 'best ally?'

Not only are we expecting less, but our expectations may be keeping us from experiencing a more typical recovery. Our inability to envision and make a better future are getting in the way of having a better future.

There's a body of research that bears this out. Richard Rosenthal could be called the father of expectancy research. He showed that teachers influence their students' scholastic performance as a direct result of what they expect of them. And he continued to demonstrate the effect in follow on research (pdf). Not only do we get what we expect, we get what those around us expect.

You're not alone, and you can make a difference

You shouldn't feel to disappointed if you've been influenced by low expectations surrounding you, or even imposed on you where you work. They are numerous and pervasive. And a conservative approach to risk is built into our biology.

But consider how different your day might be if you thought that expectations around you were positive. What if you could change things? Could you aim to invent and innovate instead of aiming to be sure that you don't fail?

In a time when so much uncertainty prevails in markets and forecasts, it may be smart to hedge against your own optimism. But for most of us, envisioning a future through and beyond the boom or bubble may call for breaking familiar habits of thinking. For new college graduates, they've only known recession expectations. They can expect more.

Shaking off the The Great Expectations Recession

To make fundamental change in Great Recession habits and adjust the trajectory they've set is not the work of a day. It may call for outside advice - a stronger voice asking, "Now that you've answered 'what if...,' and you've hedged against likely risk, what if things go well? What if best case is the reality? How does expecting good outcomes influence your thinking? How might it influence others to re-engage and strive, innovate, and hope for the best case themselves?"

Some people will find that voice in a friend, mentor, or other adviser. Some will look to executive coaches for a dose of that alternate, pragmatic, very real possibility that recession thinking has taken over our expectations, and that they're getting exactly what they expect. We can expect more.