The Data That Tells the Story About the Economy is Generally Much Better Than the Stories You Hear About the Economy

The data that tells the story about the economy is generally much better than the stories you hear about the economy. 

• GDP grew in the last half of 2022 at an annual rate of 3.1% - a rate nearly 50% higher than what it has averaged this century.
• Initial claims for unemployment came in at 186,000 last week, the lowest it has been since April of last year.
• Inflation in the last half of 2022 was 1.9 percent.
• Unemployment is at 3.5%, a level it has not dropped below since the late 1960s.
• The NASDAQ is up nearly 10% so far this year.
• New business formation in 2021 and 2022 was at record levels - by a considerable margin. (The average of new businesses formed in 2021 and 2022 was 49% more than what it averaged from 2016 to 2020.)

Those are facts.

Could we have a recession this year? That's distinctly possible. It is always possible. And you have heard - and will hear - all about that.

Could we have incredibly strong economic growth this year that continues for years? That, too, is distinctly possible. And you largely have not heard - and will not for some time hear - about that.

I don't think that enough is made of two real facts. One, traditional news outlets, like newspapers, continue to suffer from lowered revenues and layoffs. This means that the very source of our economic news tends to come from folks whose reality is very stressful and dire. Two, there is always strong incentive for commentators to put a negative spin on economic news because they know that happy, contented people are less likely to donate to campaigns or to vote.

If you want to know what is happening, go to data first and commentary later. Data rarely moves as dramatically as sentiment about the economy. And it often has much better news than ... well, the news.

That Time in History When Incessant Tweeting Was Key to Wealth and Power

Musk points out in a response to a random tweet that it isn't possible for him to fix Twitter overnight given, you know, he has 2 other companies to run. Plus, the 9 kids. And all the tweeting he has to do.

It is fascinating.

Of all the criticism (rightfully) lobbed at Trump, weirdly, I've never heard anyone say, "Well, he sure seemed to tweet a lot for a man supposedly running a country." In Trump's last year in office, he was averaging 33 tweets a day.

Musk tweets, retweets or responds to a tweet about 24 times a day. (He was recently sued by investors for tweeting out fake news about his stock. His defense was that no one really believes what he tweets so he's not responsible for those tweets.)

Imagine someday trying to explain to young people how one gained power and wealth in the 2010s and 2020s. "Well, you should tweet incessantly. Studies show that whether you're pursuing wealth or power, tweeting a lot - and about pretty much everything - is key."

For a few years there, literally the richest guy in the world and most powerful guy in the world were focused on tweets. A lot. Is it any wonder that Sam Bankman-Fried - the guy who was briefly worth $26 billion - became one of the world's richest men while casually opining that “I'm very skeptical of books. I don't want to say no book is ever worth reading, but I actually do believe something pretty close to that."

"What is the key to success in your society?"
"Rage tweeting. Trolling. Limiting your opinions to 280 characters or less."
"Could you elaborate?"
"No. You obviously haven't been paying attention."
"Well, I did. For a bit."

The Future of Gaming as Prototype for and Politics of Real Worlds

The gaming industry is now bigger than the movies and music industries combined. And I think it is just getting started in terms of impact.

One scenario that I think is distinctly plausible? Policy proposals and urban development plans will first be simulated in open games in which members of the community can participate. It will be a way to test drive new transportation solutions, urban plazas, housing solutions, businesses and malls, etc. And given that users will both try to break things and to exploit possibilities, this open simulation could be a great way to revise designs, policies and plans before they are implemented, gaining data on behavior even before the policies or developments are in place.

Russell Ackoff told the story of a building complex that had been built for a campus. They just laid down grassy lawns between the buildings, with no sidewalks. Then they watched to see where the paths naturally as people chose optimal paths from one exit to another entrance, to see what emerged. THEN they laid sidewalks that supported natural migratory paths. Imagine being able to discover such "paths" in any community, whether it be how you license, permit, tax and subsidize businesses or literally how you layout some new urban development, or how you focus educational opportunities of different kinds for different people.

Gaming creates virtual worlds. It seems like a small step to make them prototypes for real worlds.

And of course, games will always provide a place that offers more and more rapid feedback about the impact of different choices, tactics and strategies, accelerating learning more than real world experience. As we tap into that dimension of gaming, we will accelerate progress again. Or, I should say, probably already have.

The Prospect of Low Unemployment Rates with No Job Growth (or how the next half century will be so very different from the last half century)

Another great jobs report: 223,000 jobs created and unemployment down to 3.5%.

The unemployment rate has hit 3.5% 7 times in the last 40 months - 3x in the last six months. How extraordinary is that? The last time the unemployment rate hit 3.5% before 2019 was in 1969. Put differently, 3.5% is an unemployment rate we used to hit every half century and now hit every other month.

We're not hitting this because we're creating an extraordinary number of jobs. This decade the economy is creating about 700,000 jobs a year, on average, and the unemployment rate has averaged 3.7%. (Yes. Even counting the huge surge in unemployment during the pandemic.) Last decade it created 2.2 million jobs per year and the unemployment rate averaged 6.2%.

We're creating fewer jobs and have a lower unemployment rate. Why? The simplest answer is that baby boomers are leaving the workforce at a rate of about 10,000 a day now. The economy does not have to create as many jobs to bring unemployment rates to historic lows.

This suggests to me that if Fed Chair Powell is looking at things like labor markets to decide if the economy is overheated, he'll get false signals. In the last 50 years, the labor force doubled. Over the next 50 years, the labor force might not grow at all. This would mean that the average number of jobs created each month will be zero and even that would be enough to keep unemployment at record lows.