For policymakers, the most troubling aspect of this pessimism is our inability to ascertain its cause (or causes): Is it geopolitical uncertainty? The aftermath of the accounting scandals of last summer? Concerns about the ultimate profitability of new technologies and products? The depressive side of Keynesian animal spirits?
This pessimism does matter, if for no other reason than because it has the potential to become self-fulfilling. For example, high-tech equipment and software will have to play an important part in any investment recovery this year; and as we have seen, this category may be particularly sensitive to management beliefs and expectations.