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🎡 A long December, and there's reason to believe...

publishedabout 2 months ago
3 min read

Another uncertain year

Welcome to Nonrival, the newsletter where readers make predictions.

How it works

  1. On Sundays, read the newsletter and make a forecast by clicking a link at the bottom.
  2. On Wednesdays*, see what other readers predicted and how your forecast compares.
  3. Over time, you’ll get scores based on how accurate your forecasts are.

In this issue

  • Recession forecasts, compared
  • A partnership between Nonrival and Good Judgment Open!

*Today's email is a day late because I was sick this week. Thanks for forecasting. Send feedback to newsletter@nonrival.pub.

Q1 GDP forecasts, compared

🎡 ...Maybe this year will be better than the last... 🎡

Will it be, though? Readers are still extremely uncertain about next year. On average, Nonrival readers said there was just a 52% chance of positive economic growth in Q1, suggesting a very real chance of a recession next year. 41% of those who filled out the full survey said a recession next year was likely or very likely. This puts you in line with other forecasters who similarly put the chances of growth in Q1 around 50/50.

Since Sunday, there's been a little bit of good news: November's inflation data was better than expected, and the Fed raised rates by just .5% instead of .75%. On the other hand, Fed officials have raised their estimates of how high rates will have to go next year.

Readers' responses

30%: This year the first quarter will see conservative spending in preparation for the potential downturn before the end of the year.
48%: I believe the absolute magnitude will be small, and the sign seems close to a coinflip at the moment. There are factors pulling in both directions.
60%: I think that we are still going to have a recession next year, but stubborn, slow-burn inflation will make the first quarter of 2023 be slightly positive. With cost of living this high, the economy will need some time to tank.
62%: The US had a technical recession in 1H 2022 and is on course for a soft landing, barring another low-probability/high-impact event (e.g., China-Taiwan, bad pandemic twist, etc.). Of course (in my personal opinion) the Fed can’t say that, or we won’t get a soft landing. But the economy is good, the Inflation Reduction Act will go some way toward keeping it humming, and the labor market will stay tight in the medium term due to long COVID disability effects and Boomer retirements, which will keep consumer spending a bit more stable than it would be during rapidly rising unemployment.
65%: Consumer spending and the labor market look to be holding up. Fed will likely slow its rate increase in Dec to reflect better inflation data and the fact that it takes a while for its rate increases to filter through rent prices. Combined this means it’s most likely we see modest Q1 growth but nothing is certain here
70%: The [Federal Reserve's] nowcast GDPNow model still expects positive Q4 2022 quarterly real growth. Monetary policy would come with a lag too. Hence, I think a good bet would be to follow the sign of the previous quarter growth.
80%: Most of the doomsaying seems to be based on what econs expect should happen, but most people observing habits of consumers and industry simply don't see the signs the models see. Also, with such gross inequality, the models don't seem to be as reliable as they were when wealth, spending &c. were more evenly distributed.

How your forecast compares

  • You said there was a [121122_FINAL GOES HERE]% chance of positive GDP growth in Q1.

  • You predicted that the average of readers' forecasts would be [121122_CROWD GOES HERE]%. The actual average was 52%. You were closer than [121122_CROWD_RANK GOES HERE]% of readers.

Nonrival is partnering with Good Judgment Open

Good Judgment was the first forecasting project I ever participated in. It sprang out of academic research by Phil Tetlock and others. Today, it's a company providing forecasts from seasoned forecasters (Good Judgment Inc.) and an open forecasting platform that anyone can join (Good Judgment Open).

I'm very excited to announce that there is now a "Nonrival Challenge" section of Good Judgment Open, where forecasters can tackle the questions that I am posing in this newsletter.

On Good Judgment Open, forecasters can keep updating their forecasts. So if you want to see how the likelihood of an event has changed, say a month or two after it was covered in this newsletter, just go check out Good Judgment Open:

You can also create an account on Good Judgment Open and forecast there, too. Nothing about forecasting on Nonrival the newsletter is changing. But for those of you looking to go even deeper into forecasting, this is one place to start.

Extras

The year in charts:

Forecasts:

Other stuff:

Coming up

A special edition on Sunday on the future of work.

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