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1 big thing: A year when the worst did not happen

Illustration: Sarah Grillo/Axios

The most positive thing that can be said about 2018 is that, despite ultra-brittle geopolitics and an elevated risk of miscalculation amid much taunting by President Trump, no big new wars broke out.

Quick take: In my overall geopolitical forecast last January, I said that flashpoints across the planet — in Iran, North Korea and Russia, to name a few — created extremely ripe conditions for an accidentally lit match to ignite a disaster. Among the main wild cards in 2018: "willful leaders needling each other."

  • The good news is that, despite Trump shoving, nudging, elbowing and attempting to kneecap Iran's Ali Khamenei and China's Xi Jinping, tensions grew fraught but avoided the breaking point.

How the forecasts work: For the six years I've made these forecasts, 2018 produced the most mixed results — 3 right, 1 dead wrong and 2 debatable. I base the forecasts on 15 common-sense rules of geopolitics (here are the first 14 plus the 15th), general principles for figuring out the direction of big events.

Where the forecasts were right:

Elon Musk will have a good year

  • The Tesla CEO himself called 2018 his worst year ever, one marked by repeated self-inflicted crises, including a tweeted fib that he had financing to take the company private (resulting in a criminal probe and a fine) and a videotaped moment of him puffing on a joint.
  • He often appeared twisted, deranged or possibly just exhausted. Yet by the close of 2018, Tesla's share price was back just 10% from its all-time peak. (By comparison, GM was about 25% off its one-year high.)

The Big Tech uprising will go populist

  • Big Tech suffered a relentlessly horrible year. In both the U.S. and Europe, Facebook became a particular object of scorn on privacy grounds. But the disdain washed over Google, Amazon and Twitter, too.
  • The drumbeat for regulation became ear-splitting, and still new revelations of privacy infractions kept coming. From popular darlings, the Big Tech companies took on a more cracked image as naive and reckless monopolies. Only Apple managed to avoid the tar-and-feathering.

The Republicans will lose the House

  • This one was the easiest: The party in power traditionally loses seats in midterm elections, and Trump's popularity weighed on Republican candidates. Still, the shellacking was notable.
Where I was wrong:

A show of muscle in North Korea

  • I left open the possibility that Trump could order a nuclear strike on North Korea. Instead, he went as far as any U.S. president to make peace. As the year ended, the U.S. and North Korea seemed no closer to a deal. Yet the two sides were no longer threatening each other either.
Where the results were mixed:

Khamenei will climb down — a tad

  • I forecast that, given the Iranian supreme leader's need to maintain public support, he would retain his aggressive foreign policy, but adopt a softer touch at home. He has more or less maintained his same approach — not openly violating the nuclear deal signed with the Obama administration, but still lashing out when it suits him.

The U.S. will opt to live with North Korea's nuclear status

  • I predicted that, as long as Trump could say he won, he might scream and shout, but ultimately would go along with Kim Jong-un's nuclear capability. Again, it's more like a middle ground: Trump has declared North Korea "no longer a nuclear threat," but also has continued diplomacy to figure out what the "denuclearization" that both sides have pledged really means.
2. The age of not working
Expand chart
Data: Bureau of Labor Statistics; Chart: Chris Canipe/Axios

It's puzzling that so many prime-working-age Americans have withdrawn from the workforce. And the government forecasts that the problem is going to get worse.

  • From a peak in the dot-com years of 1997–2001, the workforce participation rate for those 25–54 has steadily fallen.
  • The rate was 84.5% in September and October 1997, and again in April 2000, but has declined since, reaching 82.3% last month, according to the U.S. Bureau of Labor Statistics.

By the numbers: The participation rate in this group actually has gone up since September, as the sizzling economy pulls long-term unemployed people into the job market, says Andrew Chamberlain, chief economist at Glassdoor. But in the coming years, the BLS expects the rate to go back down:

  • In 2022, the BLS forecasts, 81.1% of people aged 25–34 will be working or seeking work, down from 83.7% in 1992; the rate will drop to 81.8% among those 35–44, from 85.1%; and to 79.9% from 81.5% for those 45–54.
  • Overall for those 25–54, the rate drops to 81% from 83.6% in 1992.

Be smart: Among the reasons for dropping out of the workforce are drug use, a felony conviction and a lack of skills after a long bout of unemployment. But in a paper last year from the Kansas City Fed, economist Didem Tuzemen also blames "job polarization" — a decline in demand for low- and middle-skill jobs, thus forcing people in these age categories out of the workforce.

3. Gigging goes back to niche

Photo: Spencer Platt/Getty

In 2016, two prominent U.S. economists turned heads with a paper stating that the country was going gig — Americans were throwing aside the traditional desire for full-time jobs and opting for the freedom and flexibility of freelance work.

Where it stands: Now the pair — Princeton University's Alan Krueger and Harvard's Lawrence Katz — say they were fooled by economic noise and that workers are pretty much the same as they've always been.

  • Their old paper was exceedingly influential, trickling down to how economists, human resources professionals, marketers and more viewed the workforce.
  • But in their new paper, published this week, Krueger and Katz say people were doing odd jobs back then because they needed the work, not as a signal of a new trend. Now that the labor market is tight, they are back at work.

Joe Brusuelas, chief economist at RSM, tells Axios that the pair's new paper is par for the course. "If you're not getting it wrong 20% of the time, you are not doing your job," he says.

4. Worthy of your time

Photo: Fred Tanneau/AFP/Getty

Indian tech talent is flocking to Canada (Economist)

Measles deaths soar in anti-vaxx campaign (Peter Hotez — Axios)

Secret history of the dismal science (David Levy, Sandra Peart — Library of Economics and Liberty)

Non-feudal tech (Jack Clark with Azeem Azhar —Exponential View) (podcast)

Top 10 Hubble photos of 2018 (Ethan Siegel — Forbes)

5. 1 fun thing: McFly and Slimer at Walmart

Screenshot: Walmart ad

Forget your droll image of Walmart and free grocery pickup, and think of running into the gluttonous green Slimer, Doc and Marty McFly, or Batman in the parking lot.

Walmart used last evening's Golden Globes Awards, along with Twitter, to unveil a hopping new ad campaign (watch here) for its online grocery service, in which you pick up your order at a store.

The clip features those and other classic Hollywood movies and is meant to position Walmart in a serious rivalry against Amazon and local services in grocery delivery.

What's next: In March, Cruise — GM's self-driving car subsidiary — will start delivering food and possibly groceries in driverless vehicles, report the WSJ's Josh Beckerman and Mike Colias.