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The Challenge of Overcoming Doubt

July 18, 2012 3 minute Read by John Prestbo

Doubt is depressing. Doubt that the “fiscal cliff” will be averted come January 1, 2013. Doubt that Europe’s leaders will exhibit the intestinal fortitude needed to get their countries out of trouble and growing again. Doubt that our selfish, polarized politics will ever soften into reasonable, practical government with an economic growth agenda. All this doubt is weighing heavily on everybody. Doubtful business people are holding off on investments and hiring. Doubtful consumers are holding back on certain purchases. Doubtful state and local governments have hit the brakes on many infrastructure repairs and upgrades. Doubt’s bottom line, according to the International Monetary Fund, is that the global economic growth will be depressed to just 3.5% this year, the slowest in a decade except for 2009, after the financial crisis crested. The IMF has forecast the U.S. economy will expand 2% this year, The Wall Street Journal reported, but other prognostications are lower. Some people are clueless about the doubt factor, while others underestimate it. Anyone who follows securities markets knows there is such a thing as investor psychology that can affect prices. Irrational exuberance can send markets soaring and irrational despondence can hammer them — in both cases far beyond what objective data would suggest. The same is true of entire economies, although the driving forces are optimism and doubt rather than greed and fear. Doubt darkens the public psyche because it is the expectation that while things could work out they probably won’t. Optimism is the feeling that things probably will be just fine even though problems might occur. Optimism is the foundation needed to achieve and sustain 4% economic growth. People can’t be kidded or cajoled into optimism, nor can they be scared into it, as the presidential-election attack ads seem to be attempting. We need someone to break the shackles of doubt and give us reason to dare to be optimistic. Will anyone take up that challenge?


Author

John Prestbo
John Prestbo

2012 Economic Growth Fellow

John Prestbo is retired as editor and executive director of Dow Jones Indexes. Previously he was markets editor at The Wall Street Journal. He has co-authored or edited several books over the past 30 years. The most recent is “The Market’s Measure: An Illustrated History of America Told Through the Dow Jones Industrial Average,” published in 1999 by Dow Jones Indexes. His column, Indexed Investor, appears on the highly regarded “MarketWatch” business and finance website. He received his bachelor's and master's degrees from Northwestern University.

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