Politicians are worried because no one knows where the bottom will be. In such a gloomy atmosphere, business sales growth declines. Inventories bloat and have to be worked down. Balance sheets become strained in some cases because managements were over optimistic, either in their borrowing or in their commitments. Budget targets are missed.
Companies announce layoffs and then make cut-backs in production, as well as in capital spending.
In short, everything gets revised downward. Even the economic data that come out usually are revised downward several times. As a result, people remove their rose-colored glasses and get a dose of reality. They begin thinking the glass is half empty, rather than half full. In other words, we experience the opposite of what happens when an economic recovery is underway.