The Indicators of this year and next | Planet Money

Intro

In this episode of the “Planet Money” podcast, the hosts engage in a friendly game show competition to settle their disagreements about the indicators of the year and predictions for the future. They present their cases for the Indicator of 2023 and the prediction for the Indicator of 2024, and listeners vote for the best choices. The hosts also discuss the main storyline of 2023, the impact of consumer sentiment on elections and policy decisions, and the housing market as a defining factor in 2024.

Main Takeaways

Indicator of 2023

• The main storyline of 2023 was the saga of the soft landing, focusing on whether the Fed would bring down inflation without triggering a recession or causing the economy to collapse.
• The hosts humorously discuss the stress and debates around economic concepts like the Phillips curve and yield curve, likening the year to a romcom with a happy ending.

Consumer Sentiment and Elections

• The economy and consumer sentiment are key factors shaping the upcoming elections and influencing policy decisions.
• Despite positive economic numbers, there is a disconnect with negative economic sentiment, which could impact political and policy outcomes.

Housing Market as a Key Indicator

• Consumer sentiment, driven by factors like the housing market, is a significant indicator of economic trends.
• The housing market, affected by high mortgage rates and low sales, is a major concern and could be a defining factor in 2024.

Predictions for Indicator of 2024

• Kenny Malone predicts that 2024 will be the year of J Powell and the Fed, with interest rates as the key indicator.
• Jeffrey Guaau believes the leading economic story of 2024 will be biodynamics, specifically referring to industrial policy.

Summary

The Saga of the Soft Landing

In 2023, the main focus was on whether the Federal Reserve would be able to bring down inflation without causing a recession or economic collapse. This storyline, often referred to as the saga of the soft landing, created debates and stress around economic concepts like the Phillips curve and yield curve. Despite the challenges, the year ended with a positive outcome, similar to a romcom with a happy ending.

Consumer Sentiment and Elections

The economy and consumer sentiment play a crucial role in shaping upcoming elections and influencing policy decisions. While economic numbers may indicate positive growth, negative economic sentiment can have a significant impact on political and policy outcomes. The disconnect between positive numbers and negative sentiment raises questions about the factors driving economic perceptions among the public.

The Housing Market as a Key Indicator

Consumer sentiment, influenced by factors like the housing market, serves as an essential indicator of economic trends. The housing market, characterized by high mortgage rates and low sales, poses concerns for the future. Its performance in 2024 could have a defining impact on the overall economy and shape policy decisions.

Predictions for Indicator of 2024

Kenny Malone predicts that 2024 will revolve around J Powell and the Federal Reserve, with interest rates being the key indicator. Powell’s statements hint at potential interest rate cuts, which could have implications for car loans, credit cards, and mortgages. On the other hand, Jeffrey Guaau believes that the leading economic story of 2024 will be biodynamics, specifically referring to industrial policy. This involves promoting certain industries and supporting businesses, such as boosting the semiconductor industry and transitioning to greener energy sources. The big question for 2024, being a presidential election year, is whether Biden’s industrial policy will start showing benefits in the economy.

Conclusion

The “Planet Money” podcast episode highlights the indicators and predictions for 2023 and 2024. The hosts engage in a playful debate, showcasing their perspectives on the economic landscape. The importance of consumer sentiment, the housing market, and the actions of the Federal Reserve are emphasized as key factors shaping the economy and influencing policy decisions. As the year unfolds, the chosen indicators and predictions will reveal their impact on the overall economic landscape.