Quasimodo may as well have predicted all this
It’s October 19, 2022. Here’s the rundown:
The deficit is down. Right?
Quasimodo may as well have predicted all this
Numbers and links
The deficit is down. Right?
Rosy numbers relating to the national deficit come with a big caveat.
I generally don’t think it’s very important to keep track of federal debt and deficits. In a broad sense, sure. But it’s really not going to have much of an effect on your day-to-day life unless it’s used as a political football. Which it often is.
That’s why this headline from The Wall Street Journal may be important: Federal Deficit Fell by $1.4 Trillion in Fiscal Year 2022, CBO Estimates
You can and should read the story. But here’s the data and report that the story is citing, from the Congressional Budget Office (CBO). There’s even a nice little chart:
What this is telling us is that the government is spending less money than it did the year before. The year before, of course, being fiscal 2021. This sounds good, right? We’d all like the government to spend less money, if possible, and operate as efficiently as possible.
And while this reduction in the deficit (let’s remember, too, that this isn’t the national debt, which is currently more than $31.1 trillion and counting) is a good thing, it’s a bit misleading. This is something to keep in mind as it’s also election season, and this apparent deficit reduction may be used as a talking point.
It’s misleading for this reason: We’re comparing fiscal year 2022 to fiscal year 2021. What was happening during 2021? The pandemic (still), and with it, huge, extraordinary, one-time stimulus and policy measures designed to keep the economy from completely crashing. So, of course the deficit was lower this year.
This may be a “no duh” low-level analysis for some of you, who keep an eye on these things, but for others who may only catch the occasional political ad, it’s important to keep these things in mind. We can hope, too, that a diminishing deficit becomes a trend, too. And for you deficit hawks out there, here’s a look at how the deficit has changed over going back to around 1900:
That’s us, that little uptick at the tail end (the lower the line, the higher the deficit). If anything, it’s amazing to see just how…wild things have gotten over the past 20 years.
Quasimodo may as well have predicted all this
Crystal ball-bearing CEOs are trying to tell us what’s ahead, but what do they know?
Everybody’s got a prediction about what’s going to happen next. And yet, it’s almost like throwing spaghetti at the wall, at this point. It’s like nobody ever watched “Jurassic Park,” I swear.
The fact of the matter is, when it comes to the current state of the world and economy, we’re in uncharted territory. Terra incognita. We’re dealing with the fallout of a global pandemic, a war in Europe, technological upheaval, mass retirements, inflation, and so on. It is, in every sense of the word, unprecedented.
But a lot of Wall Street executives are also making headlines by telling everybody exactly what’s going to happen in the months and years ahead. As if they have any idea. Jamie Dimon, the CEO of JPMorgan, and a guy that I once sat a table over from at lunch at an Upper East Side restaurant, recently said that he’s expecting a recession in the next six to nine months, and that we’re in for an economic “hurricane.”
Similarly, Goldman Sachs CEO David Solomon also said this week that he thinks “there’s a good chance that we have a recession in the United States.”
Finally, a headline from The Wall Street Journal a few days ago blared “Economists Now Expect a Recession, Job Losses by Next Year.” A snippet:
On average, economists put the probability of a recession in the next 12 months at 63%, up from 49% in July’s survey. It is the first time the survey pegged the probability above 50% since July 2020, in the wake of the last short but sharp recession.
Their forecasts for 2023 are increasingly gloomy. Economists now expect gross domestic product to contract in the first two quarters of the year, a downgrade from the last quarterly survey, whereby they penciled in mild growth.
On average, the economists now predict GDP will contract at a 0.2% annual rate in the first quarter of 2023 and shrink 0.1% in the second quarter. In July’s survey, they expected a 0.8% growth rate in the first quarter and 1% growth in the second.
Now, you may feel like you’re taking crazy pills with all of these people predicting recessions, especially given that we seemingly just spent a month or two arguing that we were already in one after two-straight quarters of negative GDP growth. Remember that?
Instead, it seems like we’ve agreed that we’re not in a recession…maybe…but we will be. Soon. So hold on tight.
Again, though: There’s always a looming recession. Always. So, these predictions from Wall Street are pretty much just noise. Sure, these guys know what they’re talking about. But they’re also in the business of shaping public perception, which influences the markets, which affects their business activities. That’s critical to keep in mind when listening to what CEOs and policymakers are saying.
Are we in for a recession? Probably. Given what’s going on in the world, it’s really surprising that we’re not in one — or at least an easily-identifiable one — yet.
But there are always conflicting signals. Again, unemployment is low. And the Atlanta Fed’s GDPNow model currently estimates that U.S. GDP will grow almost 3% during Q3 2022.
What are we supposed to take away from that? I don’t know, but I do feel like when I make the mistake of lending my attention to some of this stuff, I come away feeling like I’d be better off ignoring everything. Maybe I would be. I do feel like it’s important, as an adult human being living in the United States of America in 2022 to pay attention to what’s going on, but the signal is so often lost in the noise that it can feel like a fool’s errand.
What’s my point? That predictions and those gazing at their crystal ball are just guessing. Nobody knows anything. Who would’ve predicted the pandemic — or at least a pandemic on the scale that COVID turned out to be — in October 2019? Nobody. They may have known of the possibility of it happening, but c’mon. You never know what’s going to happen.
We could go into a recession, or we could not. The Fed could drag the economy down, or it could get prices under control with a small impact on employment. We don’t know. We just need to wait and see.
This isn’t to say you shouldn’t try to read the tea leaves in whatever most responsible and effective way you may please. But just remember that “nobody knows nothing.”
While it may not be exactly true, it can feel like Jamie Dimon’s predictions are just as good as Quasimodo’s at this point (watch the clip above for the reference).
It is worth pondering, too, how interesting it is that there was a hunchback of Notre Dame. And that there’s also a quarterback and halfback of Notre Dame….makes you think…
Numbers, links, and more
36%: The percentage of U.S. counties that are “maternity care deserts.” (STAT)
30 years ago: The last time the Mississippi River was this low, and it’s a problem. (The Wall Street Journal)
10: The age of Eclipse, Seattle’s famous bus-riding dog, who died last week. (NPR)
“I am 30 years old and I miss the old internet. The beautiful people are in charge, just like everywhere else.” (El Pais)
Secret menus: “Our desire to go beyond the menu is making restaurant workers’ lives hell.” (Eater)
A new solution to an old problem?: Scientists are working on an anti-aging pill for dogs. (Wired)
