One reason that people cannot see the very negative effects of our current economy is the Recency Effect or Bias, although in this case it is more of a fallacy. Free Dictionary defines it this way
the phenomenon that when people are asked to recall in any order the items on a list, those that come at the end of the list are more likely to be recalled than the others
So when the Dow Jones reaches an all-time high this is given more recall, and also given more importance, than the recent difficulties. It is also forgotten—even if remembered, it is forgotten in a de facto way—that it took 12 years to get this high. And you only broke even, in real terms, forgetting that there was inflation in the last ten years. Of course there were also dividends to help balance inflation, but in general, assuming that you believe the stated inflation rate, if one had invested 12 years ago in the stock market, you broke even over ten years.
Yet the current stock price is being hyped like it was the Second Coming. This is not to say that those that bought stocks after the crash of 2008 did badly, they did not. But most people cannot market time their purchases.
Recency bias looks at the near present and expects it to continue. Thus the 2000 Tech Bubble is not foreseen because recently tech stocks did so well. The 2007 real estate bubble is not seen because recently real estate had done well up to the time it didn't. Nor will whatever bubble we are in now be easily seen. Looking backward is like the little sign on your rear view mirror, "objects may appear closer than they are." We think we see clearly but we do not.
This principle can be applied in many ways.
Economically, the recent past is not always a good indicator of the future. The fact that things appear to be improving does not mean that this will continue. Personally I think it will for the near term, but there is really no way to know.
The Bible even talks about the recency bias. 2 Peter 3 tells us.
3-4 First off, you need to know that in the last days, mockers are going to have a heyday. Reducing everything to the level of their puny feelings, they’ll mock, “So what’s happened to the promise of his Coming? Our ancestors are dead and buried, and everything’s going on just as it has from the first day of creation. Nothing’s changed.”
Yes, the good times will continue, no need to worry. Stocks will continue to rise. Unemployment will continue to decline. No need to worry. But as the old Henny Youngman joke went, "The economy is so bad that men are having to leave their girlfriends, and go back to their wives." No need to worry.
An economic Judgment Day is coming.
A political Judgment Day for America is coming.
We still have time to get our own personal houses in order. Do not waste whatever time remains. On a religious level God is merciful, giving us time to change.
8-9 Don’t overlook the obvious here, friends. With God, one day is as good as a thousand years, a thousand years as a day. God isn’t late with his promise as some measure lateness. He is restraining himself on account of you, holding back the End because he doesn’t want anyone lost. He’s giving everyone space and time to change.
10 But when the Day of God’s Judgment does come, it will be unannounced, like a thief. The sky will collapse with a thunderous bang, everything disintegrating in a huge conflagration, earth and all its works exposed to the scrutiny of Judgment.
In the metaphor I am drawing here, we still have time to repent, and spend no more.
There is another bias that we need to be weary of. I call it the Apocalyptic Bias, and I will talk about that tomorrow.