Author: Kevin Drum

I was browsing through some other stuff and came across a set of four economic predictions I made last April. Let's see how I did:

1. 30-year fixed mortgages will break 5%.
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2. Home prices will stop rising and might even drop 10% by the end of the year.
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3. Gasoline prices will drop 40-50 cents within the next couple of weeks.
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4. Inflation will start to recede by late spring and will be three or four points lower by the end of the year.
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I was a little too early on my gasoline prediction, but more than right over the course of the year. The other three were spot on. All in all, pretty good!

It only took 15 rounds of voting, but Kevin McCarthy finally managed to convince four holdouts to vote present instead of voting for someone else. So he never got the 218 votes he needed, but with four missing votes he only needed 215—which he already had. It was an epic victory.

For those who want some basic data for the national debate that's likely to unfold once we finally have a Speaker of the House, here is federal spending over the past few years, both before and after the pandemic. As usual, the trendline is for spending prior to the pandemic, extended to the current day so we can compare it to actual current spending.

The basic story is simple: we spent a ton of money during the pandemic and then cut back in 2021 and 2022. We are currently spending at a rate slightly higher than we would have projected back in 2020, on the order of about 1% of GDP. Depending on our priorities, this is something we might or might not want to claw back.

Things are getting a little more concrete. I'm scheduled for my leukopheresis, where they extract T cells from my blood, on February 15th. It takes about a month for the lab to perform its magic, which means the actual CAR-T procedure will likely take place on March 15. Then I have four to six months of recovery.

The Ides of March! I hope it's luckier for me than it was for old Julius.

Jeez, I take a nap and we're up to 13 votes. And Kevin McCarthy has convinced most of his skeptics to switch sides and support him. He's up to 214 votes now. Only four more to go!

asdf

Charlie is such a camera hog.

Our local gas company is alerting us in advance that January is going to be rough:

The warning Southern California Gas Co. issued to its customers was unusually blunt: “There’s no easy way to put this,” the company said. “January bills are likely to be shockingly high.” Anyone who heats their home with natural gas is likely to see a January bill that is more than double what they paid a year earlier, SoCalGas said.

It's funny, though. I don't recall that natural gas prices have spiked recently. And they haven't:

So what's the deal?

SoCalGas and other utilities have attributed the sudden and dramatic surge in prices to unusually cold winter weather in California and the Pacific Northwest, which boosted demand for heat, as well as supply and distribution constraints.

The U.S. Energy Information Administration pointed to reduced capacity because of pipeline maintenance in West Texas that lowered westbound natural gas flows. The EIA reported that Pacific region natural gas storage inventories in December were 30% below the five-year average.

I dunno. It might be chilly out here, and Texas might have some pipeline problems, but over the course of two months we've gone from the same price as everyone else to 7x the national price? That seems to call for a little more detailed explanation, especially in a state that went through the whole Enron fiasco 20 years ago and is still pretty suspicious about these things.

The American economy gained 223,000 jobs last month. We need 90,000 new jobs just to keep up with population growth, which means that net job growth clocked in at 133,000 jobs. The headline unemployment rate declined to 3.5%.

This is a pretty good jobs report. The topline number is only so-so, but the number of employed people went up 717,000 while the number of unemployed people went down 278,000. The labor force attracted 303,000 new workers and the headline unemployment rate was down two-tenths to 3.47%, its lowest rate in the past half century. Another tenth and it will be the lowest rate since before I was born.

Unfortunately, there's good news and bad news in all this. The headline number of 223,000 is pretty much perfect. It shows moderate growth, which is good, but not so good that the Fed has to panic over it. But when you add in the record low unemployment number, the rising labor participation rate (62.2% to 62.3%), and the excellent underling numbers, the Fed is highly likely to conclude that the labor force is too tight and it needs to push us even further into a recession next year.

On the other hand, weekly wages were down -0.2%, which comes to -1.6% after adjusting for inflation. That's pretty good evidence that the labor market isn't as hot as the unemployment figures suggest.

Leisure and health care were the biggest gainers. Temp services were the biggest loser.

Hum de hum:

Massive crypto lender Genesis Global Trading Inc. laid off 30% of its staff and is considering filing for bankruptcy, according to people familiar with the matter, the latest sign of financial turmoil at the crypto lender.

It's not Binance, but it's the third of the top ten crypto firms to go belly up in the past six months (along with FTX and Three Arrows). And our upcoming recession is likely to expose the weaknesses of a bunch of other crypto exchanges that otherwise might have been able to keep their problems hidden from view with a little sleight of hand.

Think about this: has there ever been another industry that's seen three of its top ten firms die over the course of just half a year? I'm not saying there isn't. I just can't think of one.

A lot of people have been playing with ChatGPT and reporting back on all its hilarious mistakes. It makes logic errors. It bullshits its way through ignorance. It's surprisingly bad at math. It writes at a middle school level.

Fine fine fine. This is all fair enough. But you could have said all the same things about Shakespeare at age six, and look where he ended up a few years later.

There's every reason to think the next iteration of ChatGPT will be way better. And the iteration after that will be better still. Within a very few years, no one is going to be laughing anymore.

So you might as well stop laughing now and instead start thinking about how we're going to deal with this. It's about a million times more important than how many votes it takes for Republicans to elect a Speaker.