If you’ve been reading the business press, there is a huge divide between economists who predict economic doomsday in 2024 and those who expect a “soft landing” with little or no upset. Both of them make good points.
There are always a few people who make annual doom and gloom predictions, and they are right once every eight or ten years. But this year, there just seem to be more folks coming down on the “seismic shock” or “cataclysmic failure” end of things than normal.
So who do you believe?
The Dubious Accuracy of Economists
I once considered majoring in economics, and I have enough of a background to know that economists are like meteorologists: they make confident predictions that don’t always come true. Like the weatherman, economists are more accurate when they tell you what happened last month and why, than they are at predicting what will happen next month or next year. So I take nothing they say for granted.
I prefer to take the prepper approach: Plan for the worst, but hope for the best. So I am planning for a stock market crash, inflation to increase again, and possibly even an economic collapse. All the while, I’m hoping for a rosy economic future in which salaries rise while prices remain steady or drop.
I’ve lived through enough recessions to know they happen and can be ugly.
Unexpected Influences
Let’s imagine that you have the world’s five best economists sitting in a room making projections for 2024. They can look at all sorts of data and charts and make predictions of what the future will hold, but there’s a wildcard. They can’t predict what will happen in the rest of the world that will affect markets or their predictions.
For example, will someone use nuclear weapons? Will the war in Ukraine continue, grow worse, or be resolved with a peace deal? Will Iran attack Israel or vice versa? Will China invade Taiwan, or will things in that part of the world grow calmer? What will the weather do, and how will that affect crops and oil prices? Will there be more shortages? Will there be more unrest and protests? Will another pandemic pop up out of nowhere?
Economists do not know. Thus you can’t expect economists to make perfect predictions.
So who should you trust about our economic future? No one. Hedge your bets. Play it safe. Be prepared for the worst. What does that mean? It means have an emergency fund so you can pay your bills if you get laid off; have some food storage so you can avoid going shopping if you have to; and pay off your debts. All things I have recommended before.
Consider making these or similar financial goals your New Year’s resolutions
