The Economy in 2013: Skip the Predictions, Look for These SignsPaul Laudicina
It’s that time of year again: Experts of all kinds are coming out of the woodwork to offer up forecasts and predictions for the year ahead. It can be amusing, but this is not the most productive way to think about the future.
Perhaps you’re familiar with Philip Tetlock’s landmark 2005 UC Berkeley study that looked at 82,000 predictions over 25 years by 300 leading economists. It turned out that expert views were no better than random guesses, and worse, the more famous or eminent, the less accurate the prediction.
So rather than latch onto someone’s static extrapolation or wild guess, I have a better idea: In the spirit of scenario thinking, we should instead look for ways to read the unfolding signs of the times with a fresh nimbleness of mind and receptivity to action.
As for 2013, we’d all like it to be the year when the U.S. and global economies finally turn a corner. Will it happen?
The truth is we won’t discern what’s coming up next if we stay glued to the rear-view mirror, frantically digesting every new bit of news about GDP revisions, unemployment, and the like—which are by definition lagging indicators. Likewise, corporate moves are more often than not quite cautious these days, and they too are lagging signals.
If you really want to read the tea leaves as the year gets underway, you need to use your peripheral vision to pick up fresh signals of what’s ahead.
Here are several of many possible signs (all firmly anchored in reality) to look for as the New Year gets rolling:
New restaurant openings. Nothing speaks recovery more strongly than the return of the upscale night out on a broad scale—as dollar menus and value meals (and microwaved dinners) give way to the rise of new eateries, bistros, and wine bars. If you can’t get a reservation at the latest A-list place in your city—and when you travel to Mumbai, Calgary, São Paulo, Warsaw, Sydney, etc.—consider that a good sign.
Upmarket hotel occupancy. In a similar vein, rising occupancy rates at the likes of Westin, Sheraton, and Grand Hyatt (I’m not thinking Four Seasons here) would represent a very good sign that corporate travelers—including meetings and conferences—are back in a significant way. In fact, I think this is a better metric than airline load factors, given the vagaries of airline regulation, capacity constraints, and other dynamics unique to that pressured industry.
Renewed demand for second homes and other leisure investments. The economic disruption has battered traditional second-home markets, from Phoenix to Tampa to the Costa del Sol in Spain, and the demand for such things as boats and recreational vehicles is, of course, way down from its peak during the boom years. Some second-home markets in the U.S., however, are already showing new signs of life, particularly the Phoenix/Scottsdale and Miami areas, which were very hard hit but are now on their way back up.
Although it may seem frivolous, this indicator is an important signal of how people view their future, how sunny their outlook is—and how open their wallets are. Don’t expect, however, to see a very strong pulse in Mediterranean Europe soon, even if the bargain-hunters are already there (as they are across the world’s Sunbelt).
In short, to notice important new signals, you need to vary your information diet, meet new people, and get out there and experience new things and new places for yourself—all items worth adding to your list of New Year’s Resolutions. You won’t learn much by talking to the same people and going to the same old places over and over again.
I like the quip by Peter Diamandis, founder of the X Prize Foundation: “The best way to predict the future is to create it yourself.” Not a bad motto. In the meantime, as you think about your corporate and personal future, steer clear of static predictions, stay supple, and use your peripheral vision as you watch for the signs of the times. After several years of mostly bad news, expect some pleasant surprises on the horizon.