Well, folks, here we are, another year gone, a new year before us. My Sagittarius Horoscope for 2019 says that I “will witness ebb and flow of opportunities and circumstances,” which is quite profound when you think about it.
But this is not about me and my personal ebb and flow, but rather ours. We are, after all, in this boat together. And so I will accept the role of an all-knowing futurist, all the while keeping a quote in mind from the Danish physicist Niels Bohr: "Prediction is very difficult, especially if it's about the future."
A Conspiracy of Negativity
Let us start with the big picture -- the economy as a whole. But as a preface, consider that back in 2005 the National Science Foundation found that the average person has between 12,000 to 60,000 thoughts per day, of which 80 percent are negative and 95 percent are the same as the day before.
That very same year, 2005, Robert Schrauf, a professor of applied linguistics and an anthropologist at Penn State, published research showing that regardless of age or culture, people have far more words in their vocabulary that express negative rather than positive emotions. Coincidence? I think not.
I mention this only because investors today have an extreme case of the willies when it comes to the prospect of a global economic slowdown spilling over into the United States. And all this negativity is happening despite the fact that the U.S. economy appears to be doing quite well.
Hiring has remained strong overall, with the national unemployment rate reaching 3.7 percent in September and has since held at that level. That’s the lowest since 1969.
Employers continue to complain of a talent shortage that is thwarting their growth plans, but the good news for employees is that heightened competition has driven up wages after years of lagging since the Great Recession.
The Labor Department’s October jobs report showed that the typical worker’s earnings had grown by 3.1 percent in the past year — the biggest jump since 2009.
Not So Hunky Dory Happenings
Still, we must find that chink in the armor, and I think I have found it. You see, even in a good economy, there will always be sectors and companies where all is not hunky dory, a highly technical economic term that I seldom use.
General Motors and its recently announced plant closures and 15,000 layoffs are a prime example of that, while another iconic American company, General Electric, lost nearly $90 billion of its market value in 2018, along with its A-level credit rating, and its place in the Dow Jones Industrial Average. Not hunky dory by a long shot.
Also, Verizon announced recently that it would take a $4.6 billion writedown on its media company, Oath, which includes Yahoo and AOL, resulting in the loss of more than 10,000 jobs. These not-so-hunky dory happenings come during an economic expansion that is now twice as long as the normal post-World War II recovery. What they mean exactly, I am not quite sure, but it is best to keep them in mind and refer to them when needed.
The Market Takes a Whoopin’
For the stock market, it’s been a volatile ride of late. We are coming off the worst December since the Great Depression and the second down year since the financial meltdown of 2008.
For the year, the S&P 500 was down 6.2 percent, the Dow was down 5.6 percent and the Nasdaq had fallen 3.9 percent, making 2018 the worst year for stocks since 2008. Lingering fears of tariff disputes, rising interest rates, and fears of diminishing corporate profits seem to be the reason, although no one seems to know for sure.
Thankfully, President Trump has demonstrated great leadership in guiding us through this time of uncertainty. As the stock market swooned, the president repeatedly assured us in a most dignified manner (hisTweets) that the Federal Reserve was the "biggest threat" to the nation's economy, describing it as "out of control." This, of course, gave me great solace.
The president also proclaimed himself to be a “tariff man,” which should only deepen our respect for our Supreme Leader as one who has profound knowledge as to the economic history of this great country of ours. Indeed, he probably could have written Smoot Hawley himself. And we all know how well that worked. Yes, we are so lucky to have Generalissimo Trump at the helm.
(Editor's Note: If you are taking this blog seriously, then Dean Barber truly feels sorry for you.)
Conceiving Bad Economics
Going back to the subject of negative thoughts, researchers now believe that our brains are wired to notice threats, which was quite useful for people in prehistoric times who could become lunch on the savanna.
Today, those physical threats have been largely replaced by cognitive threats with people focused on their financial and emotional well being and worrying about, well, everything. All of this, of course, begs the question as to whether our deep-seated fears could initiate a self-fulfilling prophesy in terms of a recession.
“We've got to be careful because we can talk ourselves into a recession. And that's how bad technicals become bad economics," economist Mohamed El-Erian recently told CNBC.
This much we know – downturns, like certain bodily functions, happen. They are part and parcel of business cycles. Will one occur in 2019? Hell if I know, but at some point, a downturn will come. Yes, I am willing to go on the record and make such a bold prediction.
All in an AI Life
Here’s another -- the hype about artificial intelligence and machine learning, so prevalent in 2018, will continue in 2019, with some astonishing breakthroughs that could very well scare the bejesus out of you.
No longer are the machines just doing the physical work. Now we are crossing into a new threshold in which they are planning, strategizing and making decisions for us. In 2019, more people will use an AI assistant to arrange their calendars, plan trips, and make restaurant reservations, all of which comes off as relatively harmless, but may in fact be the machines’ way of plotting our ultimate demise. I’m just saying.
A Historic Trek
Mark my words, someone, somewhere, will be the first person to ride in a self-driving car in a coast-to-coast drive across the U.S., which will happen in 2019.
This brave man or woman will never have taken control of the autonomous vehicle, except for those few occasions when it was under attack by other drivers. This will be an important milestone, no doubt.
2019 will also prove to be pivotal for electric vehicles. The millionth EV was sold in the U.S. in 2018, and Tesla’s Model 3 became the nation’s fourth-best-selling passenger car despite Elon Musk.
Steady improvement of battery and charging technology will continue, making EVs a more viable option for those wanting to save the world, which could come to an end in 2019, but probably will not. You heard it here first.
Of course, this all ultimately goes back to global warming and the genesis of Facebook and Google, which will be revealed in 2019 as a sinister plot originating in Moscow. Trust me, it will all come out.
A Banjo-Picking Boy
As many of you know, I live in Texas, a place where people who are in no way connected to the oil and gas industry will nonetheless pass themselves off as experts on the sector. This is an admirable tradition, worthy of only Texans, who are convinced that they and they alone are God’s chosen people. (It’s the reason why I came here.)
After years of careful study and observation, I have concluded that no one can predict the price of oil with any degree of accuracy, except for a blind boy who can be found sitting on a porch in Longview, Texas, playing the banjo. All the other would be experts fall far short.
U.S. crude prices have fallen by more than 40 percent since hitting four-year highs above $76 a barrel in October. If oil is an important bellwether of future growth, then we could be in for one bumpy ride in 2019. Notice I said “could.”
"Presenting any reliable outlook for our business is like walking a tightrope," Patrick Schorn, executive vice president for wells at Schlumberger Ltd., the world's biggest oilfield services provider, told the Associated Press.
A Dominate Play
The increasing dominance of the Permian Basin in West Texas and Southeastern New Mexico is, however, one sure bet. Its vast reserves are now far bigger than anyone had previously imagined.
The newest estimate by the U.S. Geological Survey of undiscovered, technically recoverable resources in the Permian basin are 46.3 billion barrels of oil, 281 trillion cubic feet of natural gas (17.5 times higher than a 2016 estimate), and 19.9 billion barrels of natural gas liquids.
The Permian Basin could someday be out-producing Saudi Arabia's massive Ghawar oilfield. Give me a few years, and I might predict as much. But then again, I may not.
So there you have it, my economic forecast for 2019. The life of a futurist does not come easy. I must spend days and weeks at a time sifting through the writings of others to claim original ideas as my own. It’s a thankless job, but someone has to do it.
Happy New Year everyone. I’ll see you down the road.