Grading our 2023 predictions

This could have gone better

The nicest thing I can say about our predictions for 2023 is that we tried.

The second nicest thing I can say is that Anirban did as well as the average from the January 2023 Wall Street Journal forecasting survey (and better in some categories), while I pretty consistently outperformed it.

Given my lack of qualifications compared to Anirban, the 77 economists polled by the WSJ, and pretty much anyone else trying to forecast these things, that probably says more about how unpredictable the economy was last year than anything else.

We’ll have our 2024 predictions—which unlike last year’s will be unerringly accurate—out later this week.

Average Monthly Job Growth

First Half 2023

Actual: +256,667

Anirban: +75,000

Zack: +125,000

Second Half 2023

Actual: 192,833

Anirban: -150,000

Zack: +40,000

Annual

Actual: 224,750

Anirban: -37,500

Zack: +82,500

WSJ Forecasting Survey: -6,970

Unemployment Rate

June 2023

Actual: 3.6%

Anirban: 4.0%

Zack: 4.0%

WSJ Forecasting Survey Average: 4.1%

December 2023

Actual: 3.7%

Anirban: 4.7%

Zack: 4.2%

WSJ Forecasting Survey Average: 4.7%

Real GDP Growth (annualized rate)

First Half 2023

Actual: 2.15%

Anirban: 3.9%

Zack: 3.0%

WSJ Forecasting Survey Average: -0.14%

Second Half 2023

Actual:  4.07%

Anirban: -0.9%

Zack: 0.2%

WSJ Forecasting Survey Average: 0.34%

Year-over-year Inflation (CPI-U)

June 2023

Actual: 3.0%

Anirban: 3.9%

Zack: 3.0%

WSJ Forecasting Survey Average: 3.6%

December 2023:

Actual: 3.4%

Anirban: 2.4%

Zack: 2.5%

WSJ Forecasting Survey Average: 3.1%

Federal Funds Rate – Upper Limit

June 2023

Actual: 5.25%

Anirban: 5.25%

Zack: 5.25%

WSJ Forecasting Survey Average: 5.12%

December 2023

Actual: 5.5%

Anirban: 5.0%

Zack: 5.0%

WSJ Forecasting Survey Average: 4.83%

Wild Card Predictions

Anirban’s Predictions

Anirban really shot for the moon on a few of these. He was right about manufacturing and used car prices and wrong about the rest. We’ll call this 1.5/5.

1. Recession arrives in mid-2023. Incorrect.

2. Vladimir Putin is sent to Siberia. The Ukrainians feistily survive the winter and continue to batter Russian supply chains in the East. Putin is deposed. Alexei Navalny is released from prison. Incorrect.

3. U.S. manufacturers continue to withdraw production from China, with India, Vietnam, Malaysia, Indonesia, and North America among the primary beneficiaries. Correct. Through the first 11 months of 2023, U.S. imports from China were the smallest (in nominal Dollars) since 2011. While this probably reflects inventory cycles to some extent, imports from China were down 21% from 2022, while imports from India were down just 3%. There was also the massive increase in domestic manufacturing construction.

4. Auto prices fall dramatically as both new and used inventory piles up on dealer lots. Partially correct. Used car prices are down 11% since the cyclical peak and fell in 2023. New car prices have essentially flatlined but haven’t fallen.  

5. Elon Musk is replaced as CEO of Tesla. Incorrect (this could certainly happen in 2024).

Zack’s Predictions

I did better here. I also made safer predictions. 4/5, only wrong about new home sales.

1. The labor force participation rate will stay below 63% (pre-pandemic it was 63.3%). Correct. It got as high as 62.8% (in November) but fell back in December.

2. At least 12% more new homes will be sold in 2023 than in 2022. Incorrect. There were only 5% more new homes sold in 2023.

3. Murder rates will fall in aggregate across the 25 largest U.S. cities. Correct. Homicide rates fell in almost every major city (Austin and Dallas excepted).

4. No movies in 2023 will outgross Top Gun: Maverick or Avatar: The Way of the Water at the domestic box office. (If this prediction is wrong, it will be because of the second Dune movie). Correct, though Barbie came close, and Dune 2 was delayed.

5. Baltimore will have fewer than 12 inches of snow during the 2022-23 winter. Correct