The Logjam Eases

I’ve felt frozen for the past few months. That’s easing now, in various ways. From my US-based perspective, the truly chaotic political turmoil made it hard to see clearly how any situation—political, social, or economic—might evolve beyond early November. All I could say was that my initial belief that “Politics will be crazy” in 2024 was right. But nothing else seemed predictable.

Compounding the freeze-up, the housing market is still moving like high-priced molasses, and hiring has slowed as people stick with their existing jobs longer and mobility therefore declines (see Figure 3 at this link).¹ Students, anecdotally, are struggling with what to major in, given the (high) likelihood of AI-driven upheavals in the job market in the short to medium term. The Ukraine-Russia and Israel-Gaza conflicts are seemingly entrenched and moving only slowly toward resolution. Commercial real estate continues its delayed repricing as loans come due, but the un-repriced market is still large and, essentially, frozen until various due dates.²

But not everything is icebound. AI progress has been extremely fast; deceptively so, since incremental advances are largely under the radar for the (large) group of people who don’t use AI frequently. That high speed of progress also fogs the lens looking forward and makes any predictions feel like speculation, since assumptions get invalidated rapidly at the current speed of innovation.

My playbook for times like the past few months is simple: trust my earlier self and follow the plan I set out. That doesn’t mean blind reliance on predictions I made before, but it does mean not jumping to new conclusions without evidence, and not making moves just for the sake of making them. It’s fine to sit tight sometimes and follow the plan.

But it’s not fine to do that forever. Things are always changing under the surface. Even when ice is present, water flows beneath and changes the underlying stability of the terrain. The ice will break, often suddenly: a new AI release or an important political event or an economic or geopolitical shift—and after that, movement will speed up noticeably. That’s happening now—it’s been happening for a few weeks—and I expect we’ll have a clearer picture of the future within six to eight weeks.

I’ve been absent because I had less than usual to say while I waited for clarity on the currents. One of my guiding beliefs is that I shouldn’t say much when I don’t have much to say. But I’ll say more in the coming weeks and months, and I’m looking forward to it.

1. Interestingly, this is also occurring in Australia!

2. Will there be a tipping point, or can market participants plan for and absorb these rolling hits? This question hasn’t been answered yet.