Sudden changes in business confidence cause recession.
CRS 23, public policy research institute of the United States Congress. Operating within the Library of Congress, it works primarily and directly for members of Congress and their committees and staff on a confidential, nonpartisan basis, 03-21-2023, https://sgp.fas.org/crs/misc/R47479.pdf, KPR
Changes in consumer or business confidence can impact aggregate demand. If individuals believe the economy will perform poorly in the future, they are likely to increase how much they save to prepare for lean times ahead. The associated decrease in spending would lower aggregate demand. Similarly, if businesses perceive that the economy is about to enter a recession, they are less likely to make investments in new machinery or factories because consumers would not be able to afford their new products during the recession. These types of changes in behavior can occur spontaneously and be the proximate cause of recession. These types of behaviors can also result from a specific shock and further deepen the shock’s demand impact.