Predictions and Jackasses

Show Notes

A quick housekeeping note before we get into this one: Dan was off visiting his team in North Carolina, so I taped the intro solo, but the episode itself is a time capsule. Back in January, Dan and I sat down and made a pile of predictions about where we thought the American economy was headed, and we've been sitting on them ever since. This is us finally sharing them — the Best of the Year predictions episode — with a mid-year update and some back-half calls promised for next time. And yes, there's a running bit where we agree one of the November candidates is a jackass. For the record, I'll repeat my correction from the top: both of them are jackasses. Including us.

The first half is just Dan and me catching up the way we always do, which is to say it sprawls. He told me about landing in the ER with an antibiotic-resistant E. coli — and somehow turning it into a delightful hallway conversation with an 80-year-old German woman who studied at Princeton and never wants to move back to Europe. From there we wandered into Slovenia (we'd both fallen for Ljubljana, him in person, me via The Amazing Race), the storybook reconstruction of towns like Dresden, and whether the country had really only been independent for thirty-some years. It had. That's the thing about these jam episodes — the detours are half the point.

Then we got down to prognosticating. Dan's core read was that the Fed has been aiming for a soft landing all along, and that the most underrated tool in their kit isn't the interest rate at all — it's the language. He walked me through what one of his old professors, who'd worked at the Philadelphia Fed, called basically witchcraft: a model, a couple of levers, and a podium that moves markets just by talking. I pushed back on a few points, threw in the asset-purchase tool they pulled out of the hat after '08, and we both landed on the same forecast — no recession in 2024, a couple of rate cuts, maybe softening but not a collapse. I copped to being nervous about the back half of the year and about energy specifically. Make whatever calls you want with those; we'll grade ourselves later.

The conversation that I keep coming back to, though, is the one where Dan asked me what I'd do with a magic wand. We built a whole little energy and agriculture policy on the fly — more nuclear (we agreed nukes count as green), natural gas over coal for base load where you can't get hydro, and a hard look at how absurdly we subsidize corn. Dan's regenerative-farming pitch was genuinely good, and it tied straight into the cow-burp carbon-credit piece I'd been reading from Matt Levine, where Canadian farmers feed their cows a better diet and sell the methane reduction as a credit so someone else can go drill a new well. My prediction there: some ESG or carbon-credit scandal blows up this year, because you cannot build a real market out of something that isn't really a market without inviting a Ponzi scheme to the party.

And then my favorite lever, courtesy of a tangent that started with EVs: a tax credit for keeping your old car. Dan and I got deep into the carbon math — the 55,000-mile break-even, the warranty-replaced battery that resets the clock to seventy-five — and the punchline Dr. Galen King taught me at Purdue years ago, that the most fuel-efficient car he could think of was a 1956 Bel Air, because you'll practically never pay back the energy debit of building a new one. The auto lobby would kill it in a week. Most good ideas die that way, which is maybe the most honest prediction we made all episode.

So that's the January version of Dan and me, sealed in amber and handed to you in June. Some of these calls are going to look smart, some are going to look like two guys who did too many tangents — and we'll own both when the grades come in. Everyone is a jackass, including us — but at least we wrote it down first.

— Sean