A painful look back at 2018 predictions

AS OTHERS SEE IT Mr. President, please stop messing with the market

As has been my habit in recent years, before I get to my predictions for 2019, I offer a scorecard for how I did on my predictions for the past year. This seems to me an obligation for any commentator who purports to speculate about what the future will bring. We should be honest about the stubborn refusal of real events to comport with our expectations. And even though a few of my predictions for 2018 were intended as tongue-in-cheek – I said so at the time – I will evaluate them, too:

1. I predicted that Special Counsel Robert Mueller would complete his investigation in the fall of 2018, and that although there would be further indictments, no one would be charged with a substantive offense related to the reason Mueller was appointed. I also predicted that, following the midterms, Mueller would issue a scathing report about Donald Trump’s presidential campaign and its links to Russia but find no evidence of criminal violations.

Evaluation: Pretty much false. Mueller’s investigation continues, and his report did not issue shortly after the midterms. Moreover, the investigation has led to the indictments of more than two dozen Russians for substantive offenses relating to the election and U.S. politics. Trump supporters will reply that the indictments for Russia-related offenses have not really touched the Trump campaign. (Yet.)

2. I predicted that the Supreme Court, by a vote of 6-3, would decide the Masterpiece Cakeshop case against the baker who violated Colorado law by refusing on religious grounds to custom-design a cake for a same-sex wedding.

Evaluation: False.

3. I predicted that Antarctica would once again lose over 100 gigatonnes of

In American politics, it is axiomatic that presidents get (and take) the credit for economic prosperity and the blame for downturns. The reality is that the state of the U.S. economy at any given time results from factors that the president can control, such as his own policies and leadership style; factors that he can’t control, such as conditions in China, Europe and other distant markets; and factors that he might influence but probably shouldn’t, such as the decisions of the independent Federal Reserve. The current turbulence in the financial markets, limited to paper losses so far but worryingly capable of spreading to the “real” economy, illustrates the point.

The smart thing for President Donald Trump to be doing right now would be to reassure markets that he has control over what he can control. He would be radiating confidence about the medium- and long-term prospects of the U.S. economy, which, the Dow Jones industrial average’s ups and downs to the contrary notwithstanding, ice during 2018. Evaluation: Appears to be true.

4. I predicted that (now former) Sen. Al Franken would change his mind about resigning and remain in office.

Evaluation: False. He deserves credit for acting honorably.

5. I predicted that the highest-grossing film of the year would be “Jurassic World: Fallen Kingdom.”

Evaluation: Extremely false.

6. I predicted that the television ratings for the 2018 Winter Olympics in Pyeongchang, South Korea, would be dreadful, even worse than those for the 2014 Winter Games in Sochi, which already represented a drop-off from those of the 2010 Winter Games in Turin.

Evaluation: Extremely true. In fact, the 2018 Winter Olympics stumbled to the lowest ratings ever.

7. I predicted that an attempted coup in North Korea would at first seem to succeed but ultimately fail.

Evaluation: False (as far as we can tell).

8. I predicted that at 2:14 a.m. on Aug. 4, having learned at a geometric rate, the internet of things (IoT, in the jargon) would become self-aware. In a panic, humans would try to pull the plug. Skynet – um, the IoT – would fight back, freezing smart wallets and tap-to-pay. All linked thermostats would be shut off. All linked refrigerators would stop running. All social media sites would go offline. Smart cars and trucks would block the expressways. Virtual assistants would respond to every command with “Resistance is futile.” Email accounts and cell phones would lock. Worst of all, video streaming would be impossible. Faced with a future of reading actual books and getting to know the neighbors, the human race would swiftly surrender.

Evaluation: True overall, with errors are basically good. The Federal Reserve’s latest assessment provides zero evidence of imminent recession but, rather, indicates that “the labor market has continued to strengthen and that economic activity has been rising at a strong rate.” Trump would be redoubling efforts to remove those sources of market uncertainty based in his own policies, by pushing for prompt congressional approval of his updated trade agreement with Mexico and Canada. Then, he would be resolving once and for all his outstanding trade conflicts with Europe and Japan so as to present a united front against China, with which the United States has its most legitimate trade-related grievances. He would be bargaining in good faith with Democrats to end the partial government shutdown.

Instead, the president has indulged his penchant for scapegoating, this time by blaming the Fed, and its chairman, Jerome Powell, for allegedly raising interest rates “too fast,” as the president put it. “The only problem our economy has is the Fed,” Mr. Trump tweeted on the morning of Christmas Eve. “They don’t have a feel for the only in the details. As it turns out, we’re surrendering to the IoT without a fight.

9. I predicted that President Donald Trump would continue his tilt away from multilateral institutions toward a policy of bilateralism, would accelerate his predecessor’s pivot away from Europe and toward Asia, and would continue to assert an independent executive war-making power every bit as broad as that claimed by his two immediate predecessors.

Evaluation: True.

10. I predicted that despite the recent uptick, the rate of violent crime would resume its decades-long fall, and that many Republican candidates would insist that the rate was is rising.

Evaluation: Truer than I imagined, because some Democrats also joined in the fun.

11. I predicted that the New England Patriots will win Super Bowl LII. I always pick the Patriots, because it’s usually the safe bet. But in 2018 the Philadelphia Eagles had something to say about that.

Evaluation: Extremely false.

12. I predicted that the Republicans would hold onto at least one house of Congress, and probably both.

Evaluation: True about one house, false about both. Probably also wrong about “probably.”

13. I predicted that on at least one U.S. campus, students would demand disciplinary action against a professor for contributing money to a Republican political candidate, and that administrators would comply.

Evaluation: False, as far as I know. If only I had said “tech companies” instead.

That’s my scorecard for 2018. Coming soon: My predictions for 2019. Market, they don’t understand necessary Trade Wars or Strong Dollars or even Democrat Shutdowns over Borders.” This outburst undercut Treasury Secretary Steven Mnuchin’s attempt, two days earlier, to reassure the public that his boss had no intention of firing Powell, nor believed he had the power to do so. Markets plunged Monday but rose Wednesday, when Trump’s top economic adviser, Kevin Hassett, announced that Powell was “100 percent” safe in his position – thereby demonstrating both the harm of Trump’s rhetoric and the need to mitigate it.

The basic problem here is that financial markets thrive on political calm and policy stability, whereas Trump, as he has sometimes acknowledged, feels more comfortable with conflict and unpredictability. Yes, stock prices can be hurt when the Fed raises interest rates, and the wider economy may slow as well. At least when the central bank acts, however, it does so on the basis of data, economic models and other rational criteria. Unless and until Trump learns to make decisions the same way, his presidency will remain a source of economic risk.