Ben and I started this substack in 2023 with the intention of posting at least one piece a fortnight if not a week. Needless to say, we have failed to do anything even remotely close. What happened? To paraphrase former British prime minister Harold Macmillan, events, my dear reader, events.
Events that we had not seen coming, in our personal lives as well as in the broader world. That is, our performance as forecasters was, well, pretty poor.
Nonetheless, the Financial Times forecasting challenge is a fun thing to do, so I will have a crack at it again.
Of course, before going any further, I need to hold myself accountable for the calls I made last year.* And did I, and Edward Luce and much of the pundit class, get the big picture wrong! Donald Trump is back in White House, winning the election convincingly, defying both strong economic fundamentals and the fear of Trump 2.0!
Of the other questions, I got 15 right and 3 wrong.
Rights: 2024 was warmer than 2023; there was no full-blown regional conflict in the Middle East; soft landing of the US economy; Keir Starmer in 10 Downing Street; Chinese economic growth of over 3 percent; no war in Taiwan; continued funding of Ukraine; Ursula von der Leyen continues in European Commission; positive official rate by Bank of Japan; ANC losing majority in South Africa; Argentina didn’t dollarise; renewables not overtaking coal globally; investors generally backing bonds; capital market reopening to IPOs; Novo Nordisk ending the year as Europe’s largest company; female pop stars not out earning men (Tay Tay notwithstanding).
Wrongs: X isn’t bankrupt; Sam Altman was sacked from OpenAI; Britain didn’t return the marbles.
15 out of 19 might seem good, but I failed to see the big thing. Clearly there is something happening here (across the western world), even if what it is ain’t exactly clear!
This ‘big thing’ is also probably why the Albanese government is on track to be the first single term post-War government. Right, is that a prediction?
Well, FT didn’t ask about the Australian election. Let me note my calls on the questions they did ask. I will only offer explanation where my view differs from that of the FT pundit.
Will Donald Trump start a full-scale tariff war? YES.
Will there be a peace deal between Ukraine and Russia? YES.
Will US interest rates end the year lower than now? NO.
Will Emmanuel Macron survive as French president? YES.
Will the Magnificent Seven take a fall? YES. Gillian Tett says otherwise, noting the fall will probably come later.
Will Chinese export prices fall further? YES.
Will Elon Musk and Donald Trump fall out? YES. Edward Luce differs, but I think the egos will clash sooner rather than later.
Will Germany relax its debt brake? YES.
Will the bond market buckle? NO, but I was tempted to say yes — America might experience a fiscal event in the next four years, but probably not in 2025.
Will China’s carbon emissions fall? NO.
Will Britain’s Labour government stick to its promise not to raise taxes further? YES.
Will Israel and the US strike Iran’s nuclear plants? NO.
Will Bitcoin hit $200,000? NO. Nikou Asgari says the opposite, but come on!
Will India’s GDP overtake Japan’s? NO.
Will electric vehicles make up more than a quarter of global auto sales? NO.
Will Javier Milei lift Argentina’s exchange controls? YES.
Will the war in Sudan continue? YES.
Will we have AI agents we can use? YES.
Will there be another big Hollywood studio deal? YES.
Will CDs begin a long-term revival similar to vinyl? NO.
*I am informed by J Hawkins that the forecasting-urination saying is probably a quote attributed to Lyndon Johnson that giving a speech on economics (not forecasting) is like…..
Further reading
John C Williams, 3 July 2024
Adam Tooze, 10 Sep 2024
J Bradford DeLong, 9 Oct 2024
On foreign policy, has Donald Trump become predictable?
Elizabeth N Saunders, 3 Nov 2024
The 20 Best Movies About American Presidents
Tim Grierson and Will Leitch, 5 Nov 2024
Democrats join 2024’s graveyard of incumbents
John Burn-Murdoch, 7 Nov 2024
What the “superforecasters” predict for major events in 2025
The Economist, 20 Nov 2024
Merging structural and reduced-form models for forecasting
Jaime Martinez-Martin, Richard Morris, Luca Onorante,
Fabio Massimo Piersanti 21 Nov 2024
Markets will have to get used to Trump’s mercantilist mindset
Gillian Tett, 30 Nov 2024
Forecast mostly gloomy, but that’s a good thing
Tim Harford, 3 Jan 2025
Why global bond markets are convulsing
The Economist, 12 Jan 2025
Noah Smith, 2 Feb 2025
And, for what it’s worth!