Breaking recession psychology

Here's something that everybody knew: we are worried about our jobs and household finances and the country's economy.
The Conference Board of Canada says its December consumer confidence index sank to levels just above the historic lows hit during the recession of 1981- 82.
The board had some other bad stuff to say. But we're going to choose to highlight some of the bright spots the board found in its telephone survey of 2,000 Canadians.
For one thing, the survey discovered that, for the second straight month, an increasing number of consumers said it was a good time to buy large items such as TV sets, fridges, stoves, washing machines and cars.
Glen Hodgson, the board's chief economist, noted that optimistic consumers are taking advantage of steep price cuts.
He also pointed out that the economy is in better shape than in the country's two previous recessions. Some predict Canada's unemployment rate could reach eight per cent next year, but that would be down from 13 per cent during the early 1980s and 10 per cent in the early 1990s.
In Canadians' favour is a decline in energy costs, which is taking out some of the sting of filling up cars and heating homes.
Unfortunately, any bright spots are, as Mr. Hodgson noted, being "crowded out by a fear of the future ...and that fear is not totally rational."
The economist is pinning his hopes for an increase in consumer confidence next year on an effective federal stimulus package expected to be announced as part of next month's budget.
If the package works, it could go a long way to breaking the "psychology of recession," which causes consumers to
Hodgson also points out that confidence will return once most Canadians realize they are keeping their jobs and, perhaps, getting a small wage increase.
"When that starts to happen, you'll see a change in attitude," Mr. Hodgson said.
So, much depends on breaking the "psychology of recession," which takes hold when worried consumers stop spending, which in turn causes retailers and manufacturers to cut back on goods and jobs.
We're counting on our political leaders to give us reason to be hopeful.