Famed economist Robert Shiller says there is a ‘good chance’ of a recession—it’s a ‘self-fulfilling prophecy’

Yes, it’s yet another recession prediction. And, this time, the bearish outlook is coming from one of the most respected economists in the world.

Nobel laureate and Yale professor Robert Shiller said in a Bloomberg interview on Wednesday that he believes there is a “good chance” the U.S. will experience a recession sometime over the next few years.

The odds? A “much higher than normal” 50%, he noted.

While there are many reasons behind the increasing chances of an economic downturn, from inflation to the war in Ukraine, Shiller said that he believes a recession may become a “self-fulfilling prophecy” as consumers, investors, and companies prepare for the worst and slow down their spending.

“The fear can lead to the actuality,” the famed economist argued.

Recession predictions have flooded Wall Street to start the year, with everyone from JPMorgan Chase CEO Jamie Dimon to billionaire investors like Carl Icahn sounding the alarm. The consistent doomsday forecasts coupled with nearly four-decade high inflation have many consumers feeling pessimistic.

Consumer confidence, as measured by the University of Michigan, fell to its lowest level in a decade in May, and an April CNBC survey found that more than 80% of Americans believe the U.S. will experience a recession this year.

Most economists are more optimistic, but Shiller said rising consumer prices are wreaking havoc on average Americans’ economic sentiment, even after the U.S. economy added 390,000 jobs in May.

“Inflation affects everyone,” he said. “Every time they go to the store they see inflation, and it makes them angry.”

On top of that, “stark” political polarization, “post-traumatic stress disorder” from the pandemic, and talk of a U.S. “housing bubble” are dampening consumers’ confidence in the economy, leading to increased odds of a recession, Shiller said.

A pessimistic consumer is likely to spend less, and since consumer spending accounts for roughly two-thirds of U.S. GDP, Americans’ feelings about the economy can have a real effect on economic outcomes.

The soft landing debate

Shiller, who in 2019 wrote the book on how narratives can drive the economy, titled Narrative Economics: How Stories Go Viral and Drive Major Economic Events, also noted that the Federal Reserve’s aggressive plan for interest rate hikes moving forward is a key factor in the increasing odds of a recession.

The central bank has already increased interest rates twice so far this year, and Fed Chair Jerome Powell has said that he plans to continue with rate hikes until there is “clear and convincing” evidence that consumer prices are cooling.

This could pose a risk to the economy, as securing a “soft landing”—where inflation comes down, but economic growth remains—is easier said than done when hiking rates by a half-point per Fed meeting.

Economists and Wall Street are split when it comes to the Fed’s odds of landing the economic plane and avoiding an outright recession.

Anthony Crescenzi, portfolio manager at Pacific Investment Management Co. (Pimco), argued on Tuesday that the central bank will be able to achieve its goals. The odds of a soft landing are “pretty good,” he said, while the odds of a deep recession are “pretty low.”

Mark Haefele, chief investment officer at UBS Global Wealth Management, agrees, writing in a June 2 note that “a soft landing remains possible in our view.”

“The picture is still consistent our view that inflation will decelerate but remain above central bank targets,” he wrote. “Economic growth should slow below-trend, but remain above zero, and markets will end the year higher.”

On the other side of the argument, Wells Fargo CEO, Charlie Scharf, said at a conference on June 1 that “the scenario of a soft landing is…extremely difficult to achieve in the environment that we’re in today.”

This story was originally featured on Fortune.com