It is no surprise that the current economic turmoil has been so bad and lasted so long. This is the first recession of the post internet era, an age where mass media of all forms turns over with incredible speed and can spread word around the globe in seconds. Even when the dot com bubble burst in the early 2000s there was nowhere near the current level of instantly published online news, social network gossip and digital or cable TV with dozens of news channels vying for content.
One part of how economic difficulties arise is the perception of a rise in economic risk. At first this worry hits the investors, people who carefully follow the latest economic news, but in time non-experts, us consumers, become aware of it. And as we see the risk we spend less, saving our cash for harder times which seen to be approaching.
So which came first, the recession or the news story? In the past it was probably the recession which came first, at least to some extent. The modern media system means that now it is often the news story that comes first, a forecast of future economic problems "sells papers", or rather makes people read the website and watch that TV channel...
Economic forecasts are a placebo, and often not a good one. Imagine your weekly shopping, would you really notice if your £50 weekly food shop cost £0.10 more each time? It would take quite a long time... On the other hand you probably would notice if the panicky news headline said "Inflation Hits 10%!". Many people would probably not be affected by these price rises but the psychology of it, being told to worry, is a negative placebo.
Because economies are driven by speculation of risk by telling people there will be economic problems you will get economic problems; you can make an economy ill by telling it that it will get ill. This is just like the negative placebo effect in medicine, if you give someone sugar pills and tell them that they will make them feel ill many of them will somehow get ill. The solution is simple though, just stop talking about the economy, stop taking the sugar pills!
Read about the "nocebo" (negative placebo) in medicine here: The Nocebo Effect an award-winning article by Penny Sarchet.
Nocebo at Wikipedia.