Tales & Trails of a Traveling Wiseguy

Over the past several years I've made a habit of using New Year's as a time to reflect on, and take stock of, the year just finished. It's time for the 2025 edition, looking back on 2024.

It's always a question how to title these annual reflections. Last year I struggled for weeks over how to frame the malaise that dominated 2023, the sense of doom about to arrive that never did yet made it hard to appreciate the good things that happened. What I came up with then was 2023: The Year That Was. Alas, 2024 felt like more of the same. There were some good things in there, some moments of near greatness even, but most of them were coupled with setbacks and worry about the future. Thus I'll title it 2024: Another Year That Was.

Travel & Experiences: Positive

As I break it down to understand what was good or bad about 2024, one aspect of 2024— like in 2023— that I feel warm about is travel and experiences. 2024 was another strong year for going places and having fun. In 2024:

• We visited New Zealand on a two week trip, spending time on both main islands. It was our first trip to NZ. Heck, it was our first two week trip anywhere. I hope this is a sign of more things to come, soon.


• We visited Panama for 8-9 days. There were many frustrations on that trip, but I try to think of it as overall a positive experience overall. Certainly I'm happier having gone, however far from perfect it turned out to be, than staying home or traveling anywhere domestically.


• We had a mostly expenses paid trip to Mexico for Club. We stayed in two nice hotels— so nice that we didn't even want to leave our rooms.


• We dropped our pace on weekend trips during the summer. That's on us. Though we did pick up toward the end of the summer again with Friday Night Halfway trips.

Friends & Family: Slightly Negative

2024 was another year of seeing my count of family and friends dwindle. It's not as severe as 2023 when I had to fire a few people from the position of being friends. I did lose one elderly relative, my Aunt Carol, to the infirmities of old age. She was 87.

One of the side effects of getting older is that most of your relatives and friends get older, too. Those who were the elders when I was young, my grandparents' generation: they're long gone already. Now many of my parents' generation are gone, too. Well, I still have my mom, though she's got many issues. And my wife still has both her parents. But for how long.

Finances: Positive, despite a Setback

2024 was another good year financially. Our savings for (early) retirement grew by about 16% due to market improvement, plus we continued to save aggressively to grow our portfolio even bigger. Our savings rate was less aggressive than the past few years, though, as Hawk lost her job early in the year. If not for that, and her difficulty in finding a suitable new job (she's been job-searching for 9 months), we might be at our early retirement goal already.

I do need to point out that, under the heading of money, 2024 has felt like a Dickensian situation of, "It was the best of times, it was the worst of times." In 2023, widespread belief that an economic recession was perpetually just 3-6 months away overshadowed positive actual economic figures, creating social anxiety about the economy. In 2024 widespread anxiety continued, though the bogeyman changed from an expected recession that never came to concern over inflation. A few years of elevated inflation after a historic 10+ year run of near zero inflation has people freaking out— somewhat rightly— about the future if prices continue to rise like that.

One of the aspects of "It was the best of times, it was the worst of times" is that not everybody experienced the pain of inflation or benefits of the rising market equally. In 2024 the rich got richer, the extremely rich got way richer, and everybody else got squeezed. 2024 is hardly the first time that's happened, of course. In fact in the US it's pretty much par for the course.

Which camp am I in? Honestly I've got one foot in each. I'm well off enough after years of working hard and saving prudently that I benefited from the growth of the stock market in 2024. But I'm also still close enough to the working class / middle class my wife and I grew up in that we're very well aware of the struggle of people lower down the ladder than us. And we feel the pains, too, of seeing our health care costs, for example, grow by more than $20k year-over-year as health insurers find ever more ways to cut back on what they cover. At least we can afford that $20k increase without it forcing a dilemma of, "Do we see the doctor or buy groceries this week?"

Career: Mostly Negative

I enjoyed a bit of job recognition early in the year when I won nomination to president's club at my company. That provided a fun vacation to Mexico but alas not the stepping stone in my career I was looking for. I.e., I've been angling for a substantial increase in job title, to recognize the level of skill and capability I demonstrate, but that didn't come. And with yet-again new leaders in my department since then I've now actually fallen backward a few steps yet-again as the new managers yet-again expect me to start over at square one in proving myself.

New management is also frustrating in other ways. I won't elaborate specifics here as I'm keeping this blog open, but let's just say multiple signs are telling me it's past time to leave. Hint: the sacking of the whole rest of my team earlier this week is one example. That's sad because I've been with this company for over 7 years and have had some good times and done some great work here.

The notion of it being time to find a new job is complicated by the fact I'm looking to retire soon. I really don't want to start a new job just to work it for a short period of time. When I decide I'm done here, am I done-done? As in ready to retire?

I've been holding on in this deteriorating job for a few years now, telling myself I'm on a glide path. I've swallowed my frustration at numerous things for a few years, telling myself I've just got to keep gliding a little longer. Early in 2024 I thought I was ready to walk over management bullshit. The glow I enjoyed from telling off my boss died a few days later when Hawk and I learned that her job was being eliminated. So I've held onto my job a bit longer. How much longer now? I'd like to say this is the final year, perhaps even the final 4 months, but I'm not sure. Meanwhile the frustrations mount.

The US Bureau of Labor Statistics today published the much anticipated consumer price index (CPI) for October. Economists' consensus was that it'd come in at 7.9%. That'd be a high rate, though less than June's 9.1%, a 40 year peak, or even last month's 8.2% level. Well, the figure came in slightly less bad than expected: only 7.7%. But Wall Street went wild.



Stocks went on a tear today. The S&P 500 index rose 5.5%. The tech-heavy NASDAQ rose more than 7.3%. Within the technology sector heavy hitter Apple was +7.3%, Amazon +12.2%, NVidia +14.3%.

While traders on Wall Street were living it up, I was out grocery shopping on Main Street. The price of the carton of milk I bought today was 13% higher than just one week ago.

It's not just milk that's getting more expensive. Across the past year I've seen prices on many grocery staples rise by 50% or more.

"Why isn't the inflation number higher, like 50%, then?" you might ask.

It's because the official inflation metric used excludes "volatile" things like food. Riiight, one of the core necessities of life, food, is excluded from the statistics.

There was a small round of layoffs at my company today. No, I was not impacted. But ironically I was thinking about the prospect of layoffs over the weekend. While many stories in the news the past several months have been about record employment and rare leverage in hiring favoring job seekers, articles in just that past few days have begun talking about layoffs. Meta, for example, which has apparently never had a layoff, just announced one.

The fact the tide of the business cycle is turning to layoffs now is unsurprising. Just over two months ago it was announced the technical definition of a recession, two consecutive quarters of economic contraction, had started earlier this year. (One of the problems with this definition is it only recognizes a recession ~8 months after it starts.) Perhaps even more important than that is the practical definition: most people believe we are in a recession. Since I wrote that two months ago the stock market has dropped further. Friday it closed down 25% YTD. Furthermore, bears are in the majority. Investor sentiment is that it will get worse before it gets better.

Fortunately for my company and those remaining with it, this was a small layoff. Company-wide, fewer than 10% of the staff were let go. Within my department of ~30 people, only 2 were dismissed. Both were people who've been with the company about 6 months.

Update: with more perspective a day later the layoff decision looks worse. 😨

Is the US in a recession?

Many people are asking that question since the Commerce Department reported yesterday that US GDP contracted in the 2nd quarter at an annualized rate of 0.9%. That comes on the heels of a 1.6% annualized contraction in the first quarter this year. The commonly understood technical definition of a recession is "two consecutive quarters of negative growth", so it would appear we're there. But it's not that simple.

Officially, recessions are determined by the National Bureau of Economic Research (NBER), a nonprofit organization. And within the NBER the Business Cycle Dating Committee, a group of 8 economists, decide when recessions happen. Generally the Dating Committee only determines that a recession began months after the two-consecutive-quarters definition was met. Largely that's because GDP numbers get revised all the time. Think of the figure announced yesterday as the preliminary number. It could be revised higher or lower as more data from Q2 becomes available.

In addition, the simple definition "two consecutive quarters of negative growth" is not just simple, it's simplistic. Many other factors determine whether the country is in a recession— a label that is fraught with social and political meaning.

A common ingredient of recession— and a key part of that social and political meaning— is unemployment. A recession is a time when unemployment rises, job growth is flat, and wages are stagnant. Right now none of these are the case. Unemployment is 3.6%, still low by historical standards. New jobs are still being added to the economy at a healthy pace, and wages are up a lot this year. Just look at all the stories in the news about how people are leaving jobs because they're being offered more money somewhere else, and employers are struggling to hire. Numerous government officials, from the Treasury secretary to the Federal Reserve chair, have pointed to labor data as a reason why we're not actually in a recession right now.

Keep reading: But most people think we're in a recession....

Yesterday I shared a graphic I adapted from CNN.com showing the US inflation rate over the last 65 years. I remarked that there were a lot of narratives I could relate about what that chart represents. That's a hallmark of great charts, BTW: they convey a lot of possible stories at the same time.



One thing that happens with a chart like this is your eye being drawn to the places where the graph is the highest— those two peaks in 1973 and 1980. It's that highest peak, around 1980 when inflation hit 15% annually, that I want to write a bit about today.

I was a child at the time but I do remember that era. I was getting old enough to learn things about money, prices, etc., particularly because I was precocious and way ahead of my age group in math. I remember seeing prices rising noticeably year-over-year. Things like the Sears catalog made it easy to compare; I could have both the current catalog and last year's open at the same time, and point right to how much prices had gone up.

Who Inflation's Good For

One thing I also remember about that time was that my parents weren't too bothered about inflation. Years later I recognized that was because they were debtors.

Inflation is a huge threat to savings. When the inflation rate is, say, 15% (like it was that one year) if you're not earning 15% on your savings, you're losing money. And most people weren't earning 15%. Middle class Americans back then kept their savings, if they had any, in ordinary bank accounts. Interest rates paid on savings were several points below the inflation rate. Getting paid 8% interest may have seemed like great money— it made unwise savers feel they were getting rich— but when prices were increasing 10%, 12%, 15% annually the value of their savings was being eroded.

For people who owe money, on the other hand, inflation can be helpful. My parents owned a house with a mortgage. The rate was fixed at 8%. With everything else growing at 10% a year the relative price of that mortgage got smaller and smaller.

New home loans had rates of 18+%. It was a good time to own a house and not need to move. ...My parents were looking to move, BTW. They needed a bigger house for their growing family. But the cost of borrowing new money at 18% or higher made it unaffordable.

My parents owed money on credit cards, too. For a while inflation helped shrink the relative size of their old debt. But then the credit card issuers convinced the government to remove limits on interest rates. In particular the state of South Dakota removed its usury laws in 1981, and several major credit card issuing banks moved there (article in The Atlantic, 10 Jul 2013). Other states followed suit. Within a few years credit card interest rates shot up from an average of about 12% to almost 20%.

BTW, you notice how even today most credit cards have standard rates of 18% or higher even over the past 30 years when inflation has often averaged just 2-3%? Thank the "freedom" granted by states removing laws against usury and abusive lending in the 1980s.

Today I read about an interesting tweet that went viral last week about MBA students overestimating what the average US worker earns:

I asked Wharton students what they thought the average American worker makes per year and 25% of them thought it was over six figures. One of them thought it was $800k. Really not sure what to make of this (The real number is $45k)

— Nina Strohminger (@NinaStrohminger) January 20, 2022

Nina Strohminger is a professor at Wharton, the MBA program of the University of Pennsylvania. Wharton is currently rated as the #2 business school in the US.

"Lies, Damn Lies, and Statistics"

Most of the viral discussion about this tweet has been about how out of touch the MBA students are and why that's actually common— not just for people who tend to come from affluent families but everyone. My immediate thoughts were along those lines, too. But then I realized that before we even get to debating why this is, we need to look at the problems with the statistics. Professor Strohminger has actually done a poor job here. Five Things:

1. Okay, so one-quarter of the students think the number is $100,000+. What about the other 75%? What threshold fits the lowest one-quarter of answers? What was the average?
2. How many students were surveyed? Small sample sizes yield meaningless results.
3. What efforts were taken to ensure the students participating are representative of the class? (Since so much of the viral discussion is about characterizing Wharton students, or MBA students in general, or academic elites in general.) And were they taking it seriously? The person who answered $800,000 was likely ridiculing the question. How many others might have done the same?
4. Did you specify median or mean? These figures are very different.
5. The "correct" answer is also different depending on not just median vs. mean but also full-time vs. part-time work. Many policy experts would argue a better metric is median household income.

Am I Smarter than a Wharton Student?

FWIW my quick answer was $65,000. That's not correct for the exact question the professor asked. Though even her answer seems incorrect. The Social Security Administration reports that last year the mean US wage was $53,383 and the median was $34,612.

My $65k answer comes from thinking about median household income— a better measure than individual income for purposes of many economic policy discussions. I recall looking up the $65k figure when I was writing about US socioeconomics a few years ago, so that's why it was my immediate answer here. On that metric I was actually very close. According to the US Census (2020) it was $67,521 in 2020. It was higher in 2019, at $69,560. Likely it was $65,000 a few years ago.

Are we still in a recession? That question occurred to me recently. It's kind of surprising there hasn't been much about it either way in the news lately. On the one hand, parts of the economy have been doing quite well. Others... maybe not so much? It's unclear.

Clearly things were bad last year in the spring. The National Bureau of Economic Research (NBER) determined that the recession started in February 2020. They haven't said anything about when it has ended. I know; I checked.

While checking I found this Reuters article, "Is it over yet?" from a month ago (4 May 2021) stating, among other things, that yeah, the NBER is very cautious in declaring a beginning or end to things. Indeed, they only concluded in June that the recession had started in February. Even that four-month lag was quick compared to their past calls. It took them a year to determine that the Great Recession had started!

Okay, so if officials are only going to tell us officially when something is over when it's "No shit, Sherlock!" obvious, what can we figure for ourselves? Well, let's look at the stock market.



I obtained this chart from Yahoo! Finance showing the S&P 500 Index from November, 2019 to present. You can see the precipitous drop following a market high on Feb. 19. That's a key indicator, possibly the only key indicator, the NBER used to determine the beginning of the recession. Of course, by the time they figured that out in June, 2020, the market was already well on its way to a recovery. By August the market had already eclipsed its previous high (trace across the dotted line I provided) and has gone on to grow 20% beyond a full recovery.

So, by stock market indicators, the pandemic recession ended 10 months ago. For the rich the pain was short lived, and the rich are now richer than ever. As I've noted before, though, the market is not the economy. While the rich have done well, others may still suffer.

What's another indicator? How about unemployment. I looked up unemployment statistics and found this bare-bones but effective chart from the Bureau of Labor Statistics:



Unemployment hit a high of almost 15% in April, 2020. Since then it has recovered... but not to its pre-pandemic levels. In late 2019 unemployment stood at about 3.6%. Today it remains just above 6%. That's still a lot of people who aren't back to work yet. ...And coming out of recessions these figures are generally considered an under-count. That's because people who've been out of work long term and have given up looking for work are not counted in the statistic.

So, for the investor class, the recession ended months ago. For the working class, especially those working in sectors hard hit by shutdowns, we're not over it yet.


Take-home essay question: Why, when these charts took me less than a minute each to find, has there been so little coverage in the news?

Every year around the New Year I reflect upon the past 12 months. This year it's challenging to write about. I could just observe, for about the billionth time, that 2020 was a total dumpster fire and be done with it....



But to stop there would be taking the easy way out. Over the years I've found retrospective writing is helpful both to strengthen my own recollection years later as well as to structure and sharpen my thoughts in the present. Thus even though 2020 was a year almost anyone would be glad not just to close the book on but slam it shut, I'll write about it for better understanding.

A Singular Story Defines 2020

It turns out to have been ironic that the dumpster fire meme originated in 2016. The events of 2016 we all thought were so horrible were dwarfed by what would come four years later.

In the past I'd wondered if something could happen that's so overwhelming it's headline news in every category simultaneously— politics, money, health, life, entertainment, sports, etc. In 2020 exactly that happened.

I'm talking, of course, about Coronavirus. It's affected literally every aspect of human existence in 2020. And generally not for the better. 85 million people have been sickened worldwide and nearly 2 million have died (source: worldometer Covid-19 pandemic, retrieved 3 Jan 2021). Those figures are widely considered an undercount, BTW, especially the deaths figure. Billions of people have been under varying degrees of stay-home orders for the past 10 months, disrupting education and many sectors of the economy. Businesses are failing for lack of revenue and unemployment is markedly higher.

While it can be tempting to say, "2020 sucked because of Coronavirus" and leave it at that, that's oversimplifying it. When I write these year-end retrospectives I like to examine the year through different lenses. ...Even if, for 2020, all of those lenses have been tinted by this one story.

Personal

For myself and for my immediate family the story of 2020 can be summarized by three terms: Adapting, Making Do, and On Hold. We've adapted fairly well to the changes required by the global pandemic. My job was already largely work-from-home; now it's 100% WFH. Our habits of eating out frequently were surprisingly easy to change to cooking at home 90%+. We're traveling way less, which is a disappointment. Health-wise we've avoided Coronavirus.

Jobs

My job situation has been "meh" overall. In April I had a 10% involuntary pay cut that was restored in August. But hey, at least I've had a job consistently. That's more than I can say for some people. Too bad my job's still pretty much a dead-end job. But hey, at least it's a fairly well paying job.

Hawk's job situation is going better than mine. She had no pay cut or furlough this year. A promotion she was angling for a year ago didn't materialize, but she may have another chance this coming year. At least her executives support the idea that she's on a growth path.

Family

I was about to write, "At least in 2020 nobody in our family died," but that's not true. One of Hawk's aunts died in January. She had been ill with inoperable cancer and was age 97, so her passing wasn't a surprise. Other than that, nobody has died. In fact, some people are doing better than before. Hawk's dad, who almost died in 2019, has been getting better. My mom finally got effective treatment for illness she's tolerated for at least several months if not over a year already. There is Covid in the family, though nobody's died from that. An elderly aunt of mine got Covid but recovered pretty well. A college-age niece has struggled with Covid for over 4 weeks now but seems to be on the mend, slowly.

Money

You would think a story about money in 2020 would be negative. With widespread closures, loss of business, job loss, etc., there has been plenty of bad news on the money front in 2020. But by late in the year things turned positive, at least for investors.



The chart above shows the S&P 500 Index, an amalgamation of the stock prices of the 500 largest US companies, from 1 January to 31 December 2020. As you can see in the shape of the curve, there was quite a drop— a market panic— in late March. I remember the broad markets dropping 10% in a single day— at least twice. But after a few weeks of bloodletting the recovery began. By August the index was back to even with where it started the year. By the end of the year, after a few smaller ups and downs, it finished up 16%. (You can see the actual numbers in the small print in the pic. The index began the year at 3234.85 and ended at 3756.07.)

Now, I've written before that The Market Is Not The Economy. Well, the Index is not the Market, either. Because of the way the S&P 500 index is weighted most of the apparent gains it shows are from the 10 or so hugest companies at the top. For those "mega-caps", heavily weighted toward the modern tech sector, 2020 has been a banner year. For the other 99.8% of the market it hasn't been so sweet. But even so, most market sectors are up for the year. My portfolios, which in the depths of March were down over 20% from January, finished the year up about 10%. That, surprisingly and pleasingly, keeps me on track with my long term financial goals.

The Year Ahead

As we close the book on 2020— or slam it shut— it's tempting to think how much better 2021 will be. And probably it will be better. Coronavirus vaccines were developed in record time (not actually surprising in light of the science behind the development but still historically fast) and are now available. As they roll out across 2021 we may not vanquish Coronavirus but should at least beat it down that life can largely resume pre-2020 normality.

But there's no guarantee! If there's anything 2020 has taught us it's how thin the ice beneath us is. For example, what if there's a serious stumble with the distribution or efficacy of the vaccines? What if the virus mutates? What if there's another Black Swan crisis entirely unrelated to Coronavirus? At any moment, in any place or fashion, the ice beneath us could crack and plunge us into catastrophe.

Thus I count my good fortune where I can, give thanks for what I have, and stay careful about how precarious the good life is.