The End of Trust

Manufacturer inventories. Durable-goods orders. Nonfarm payrolls. Inflation-adjusted GDP. These are the dreary reportables that tell us how our economy is doing. And many of them look a whole lot better now than they did at their early-pandemic depths. But what if there’s another factor we’re missing? What if the data points are obscuring a deepening recession in a commodity that underpins them all?

Trust. Without it, Adam Smith’s invisible hand stays in its pocket; Keynes’s “animal spirits” are muted. “Virtually every commercial transaction has within itself an element of trust,” the Nobel Prize–winning economist Kenneth Arrow wrote in 1972.

But trust is less quantifiable than other forms of capital. Its decline is vaguely felt before it’s plainly seen. As companies have gone virtual during the coronavirus pandemic, supervisors wonder whether their remote workers are in fact working. . Direct reports ask if they could have that casual understanding put down in writing. No one knows whether the boss’s cryptic closing remark was ironic or