The experts opine, reality laughs

Predicting the future is a very fraught exercise.?

One famous prediction was made on January 19, 1989, when East German leader Erich Honecker vowed that the Berlin Wall would still be standing 100 years later.?

His wasn't the only voice predicting the wall's longevity, but it was probably the loudest and most vehement.?

Something about such a prediction's volume and strength almost begs to be made wrong. While Honecker was adamant that the wall would stand, the collective will from the people in the street eventually spilled over the wall and toppled it.?

The question is: who is right today??Bloomberg, Bezos, and Paltrow can't all be wrong… can they?

More on that in a second.

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A week of predictions.

Last week Bloomberg's economic model predicted a 100% chance that the economy would be in a recession in the next twelve months.

Also last week, Jeff Bezos warned companies to "batten down the hatches," Goldman Sach's CEO predicted a recession, and even Elon Musk chimed with a prediction of recession through the spring of '24.

Not to be outdone, Gwyneth Paltrow summed up her view of the economic mood with, "The economy sucks," now, it must be real.??

But does it (suck)?

When I last talked about the economy a few weeks ago, I thought we'd have some clarity by now.

And sure enough, a Bloomberg prediction with a Paltrow endorsement added some conviction to the recession prediction.

So, you know what comes next.?

In the same week, Bank of America CEO Brian Moynihan said that B of A doesn't see a slowdown in consumer spending. On the contrary: transaction volume for September and the first half of October increased 10% over the same period last year.?

American Express's CEO also isn't seeing slower consumer spending, and United Airlines CEO practically sprung into the air and clicked his heels as he said he is "so optimistic about 2023."

Which made me think of the Berlin wall.

I am not making any predictions.

What I observe does make me think of Honecker and the Berlin wall. He was the wizened influential expert with a lot at stake in seeing his prediction through, like Bloomberg, Goldman Sachs, and even Jerome Powell (who, remember, wants a sustained period of economic decline to moderate inflation).

But it was all the people in the street, like the B of A, American Express, and United customers, doing what they do and acting unpredictably that fundamentally transformed the world.?

Sometimes the experts are wrong, and the reality is something completely unexpected.

Like the Berlin Wall coming down.

And maybe,?not?a recession?

What occurs to me is that if we don't have a recession, it will be because the consumers who make up the economy decided not to participate.??

It was enough to bring down the Wall, what will it mean for the economy?

From Around The Web

A blast from the past?here?is the short blurb from the LA Times in 1989 quoting Honecker's conviction that the Wall would stand for another 100 years. And then?here?is a short story about its fall in November of the same year.

Here are some of the predictions from last week,?including?Bloomberg's 100% recession prediction, Gwyneth Paltrow's?comments, Moynihan's?comments?on the strength of consumer spending, and?United's CEO on 2023. Who knows where all this is going, but it is fun to watch.