December 22, 2023 8:00am

Power Pollers Say 2024 Economy Looking Strong

But there is one depressing warning sign

Photo of Bruce Dobie
Nashville, TN Correspondent

Power Pollers in Nashville think the national economy in 2024 is going to do just fine, thank you very much. In this December survey, most members said:

  • Mortgage rates will begin falling in the second quarter of next year, leading to a more robust housing market.
  • “Optimistic” is the term most members select when asked to describe the economy in 2024.
  • The amount of money that members are spending on the holidays is at about the same level of last year.
  • And if there happens to be a downturn next year, the main culprit is likely to be our country’s political instability, such as the ongoing dysfunction in the U.S. House of Representatives, the trials and tribulations of former President Donald Trump, and partisan rancor overall. (THIS IS THE PREVIOUSLY MENTIONED DEPRESSING WARNING SIGN.)

Here are the specific questions and answers to the December Power Poll. Participation was just a tad off from the previous month. One can only assume people are busy this time of year, maybe dipping into the eggnog.

CONTEXT 1: When will the other shoe drop in this economy? Soon? Never?

Economics is a science. A dismal one. Oddly, at the same time that it is dismal and dry, it can also get emotional. In fact, there’s an entire subset of economics that focuses only on human behavior and its intersection with markets and money. Consider: When people stand in line to withdraw their money from a bank that they think is failing, that’s as much about the psychology of panic as rational money management. When the Dutch loaded up on tulip bulbs in the 17th century, driving people to the point where some were trading four cows for a single tulip, they were driven more by emotions like mania and greed than anything having to do with facts and figures.

I was speaking with the head of a family VC office in Nashville recently, and this guy and I got to talking about the trajectory of the economy. He said, “Things are okay economically, but it’s like we’re all sitting around waiting for the other shoe to drop.” In other words, the overriding feeling about the economy right now is exactly that: a feeling. An emotion. Somewhere in our hearts and minds, it’s a nagging, disturbing, anxious feeling that something is bound to go wrong.

Reasons to think things are going to go more poorly next year are well summarized by local PR exec Joe Hall in the Power Poll’s comments section. He writes: “Numerous troubling factors. Personal: low wage growth vs persistent inflation, high consumer debt, high rate of investors raiding their retirement emergency funds; National: soaring spending and debt, high interest rates pushing cost of debt higher.”

One might add more to the list, such as high mortgage interest rates that have curtailed most Americans’ liquidity because so few people are able to sell their biggest asset, that being their homes. One might also add to the list of negatives the fact that spending by VC firms is off. People are sitting on their checkbooks. They’re cautious.

On the other hand, I hate to be focusing on the negative. And the fact is, MOST POWER POLLERS BELIEVE IN GOOD TIMES AHEAD. Reasons: Inflation has finally been wrestled to the ground by high interest rates. (Lower gas prices helped drive inflation down also.) And in one of the greater high-wire acts, this was accomplished without throwing a cold blanket on the overall economy and causing a spike in unemployment. (Not that this should interest anyone, but Google MV=PQ if you’re bored. It’s pretty cool actually.)

On the positive outlook side, we have to add the fact that the stock market is hitting record highs. Up, up, up.

One final big-picture observation from your local Power Poll correspondent (who besides logging 24 hours in economics at Sewanee has absolutely no reason to be writing about economics), is this: One of the great tug-of-wars taking place now in the U.S. is between Reaganomics and Bidenomics, the trickle-down theory of wealth creation (i.e., cut taxes for the wealthy and they will invest more to the benefit of all) as opposed to a focus on “growing the middle out and the bottom up,” as Biden himself describes it.

This is a great argument for us as a nation to be having. Required reading is simply the op-ed pages of The Wall Street Journal and the New York Times. You will get the debate and the dissonance therein.

CONTEXT 2: Power Pollers’ Answers

Power Pollers say mortgage rates will start falling in Q2, home sales will recommence their inexorable assent, the year 2024 overall will be sunshine and roses, but oh boy, one thing stands out. There’s a skunk at the party and it’s Washington D.C., politics, R vs. D, the threat of national unrest, and this freak show of a democracy as we know it.

I think this is the diamond in the haystack of questions we asked this time around: What could ruin our economy in 2024?

It’s not inflation. It’s not the national debt. It’s not high interest rates. It’s not global warming. Rather, it is the lunacy of America’s political class that is most likely to disrupt our economy in 2024. It’s the people we elect to office, along with its attached political industrial complex, that is most to blame. It’s our public space, our government, which is the problem. How sad and pitiful is that?

I do not like this. What’s at stake is this precious, wonderful, creative American marketplace, with its harebrained ideas and crackpot business concepts and free-thinking inventors and scientists and propeller-heads and professors and anyone else bold enough to go to market and launch a business. It is a marketplace that relies on competition to weed out the bad ideas and accelerate the good ones. It has got its faults, and not all of America’s private sector goes according to plan. But a helluva lot of it works to the benefit of a helluva lot of people. It is an astonishing machine.

Freedom of thought and willingness to take business risk are so embedded in the American psyche. Our economic adventure has brought us greatness on the world stage. Nothing excites me more than the story of a business launched in a garage that makes it to the NYSE. Such is the stuff of individual aspiration, of trying to solve a problem, of trying to do something better than it is currently being done.

When Power Pollers identify national political dysfunction as the greatest potential threat to our economy, man oh man, that’s reason enough to get hacked off.

Power Poll Members: Do you have a friend or colleague who should be on Power Poll? Please invite them to join!

About Power Poll: Power Poll asks questions of the most powerful, influential people in U.S. cities. It is not a scientific survey. But because the people responding to the surveys comprise the leadership structure of their cities, the results afford a fascinating glimpse into the thoughts, opinions, and beliefs of those in a position to make change. Power Poll is distinctly nonpartisan.

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