While economic and monetary policy as well as “leading indicators” can provide insight regarding the state of the markets and the economy, “they have severe limitations as forecasting tools. This approach will not produce a definitive advance reading of a major shift from growth to contraction: a recession.” This according to a recent article by Yale professor and Nobel Laureate Robert Shiller for The New York Times.

Predicting a recession is extremely difficult to do, Shiller argues, but if you’re going to try it is essential to examine the “popular narratives that may be infecting individual economic decision-making.”

For most people, Shiller explains, decisions around savings levels, job changes or risk tolerance are “fraught with ambiguity and uncertainty” and are influenced by emotions and hearsay. Citing his new book, Narrative Economics: How Stories Go viral and Drive Major Economic Events, he offers a list of issues that can lead to narratives that, in turn, can “periodically surge into epidemics and are capable of changing the economy’s directions or of turning small booms and recessions into big ones.”

The list includes the following:

• The level of public confidence
• Social norms related to modesty or extravagance
• Monetary standards of value
• The threat that artificial intelligence poses to human labor
• Real estate trends
• Stock market bubble

“Changes in the current environment may cause a subtle mutation in these perennial stories,” Shiller writes, “causing them to go viral and sometimes increasing their contagious effects or extending the period in which they expand. Much as epidemiologists study infectious diseases, we economists can study the spread and transformation of these powerful stories.”