🌎 Visit from the gloom squad

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🚨The SEC actually gave bitcoin ETFs the green light today. (More on the news and what it means here.)🚨

Also tonight: Recession fear-mongering on the right, and a few other catastrophes to expect in 2024. Let's get into it.

By Allison Morrow

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Last updated January 10 at 6:59 PM ET

💸 CRASH TEST

Cheney Orr/Reuters

It's not every day you hear a leading contender for the presidential nomination openly rooting for the economy to crash, but here we are...

ICYMI: Former President Donald Trump earlier this week said the economy was fragile and likely to crash — a statement that's at odds with virtually every economic gauge available.

"When there's a crash, I hope it's going to be during this next 12 months because I don't want to be Herbert Hoover," he said Monday on the right-wing platform Lindell TV. (And yes, that's a network run by noted conspiracy theorist and MyPillow pusher Mike Lindell.) In case you need a little history refresher, the Great Depression happened on Hoover's watch. Suffice it to say he didn't win a second term.

As it happens, Trump already presided over the steepest economic collapse in modern US history, when the pandemic hit the US in early 2020.

But as my colleague Bryan Mena points out, Trump's assessment of the US economy isn't shared by most investors or economists.

Inflation is down and the labor market remains hearty even after the Fed's 11 interest rate hikes since March 2022. The elusive "soft landing" isn't guaranteed, but it's not being ruled out, either.

Most economists expect the US economy to steadily slow throughout 2024 and for the unemployment rate — which has been under 4% for almost two years — to edge higher.

That is a far cry from a "crash." A slightly weaker economy would help bring inflation back in line with the Fed's target of 2% and allow the central bank to begin cutting interest rates.

Of course, Trump is not saying he wants the economy to crash, but if it does, he'd prefer it happen on Joe Biden's watch. He also appears to be seizing on the sentiment, fueled by right-wing media and Republican officials, that the economy is in the gutter.

Economic pain is real, but it has more to do with prices remaining high, along with a housing market that has become impenetrable for most first-time buyers.

Bottom line

Be careful what you wish for.

A recession, or "crash," typically encompasses job losses in the millions, negative economic growth and an ailing stock market. While the 2020 pandemic recession was brief, most are not, especially if they are the kind of severe downturn that Trump appears to be forecasting.

If such a crash were to hit in the next 12 months, it would be the defining issue of whoever wins the White House in 2024.

RELATED

Tonight's final Republican debate before the Iowa caucuses will be a one-on-one showdown between Nikki Haley and Ron DeSantis. The debate, scheduled for 9 pm ET, is hosted by CNN. Here are the big issues we'll be watching for.

NUMBER OF THE DAY

9.9%

Mortgage applications surged nearly 10% the first week of the year, a sign that lower borrowing rates are bringing homebuyers off the sidelines.

That's a promising sign for the housing market, as home affordability in the fall of 2023 was the worst in a generation.

Mortgage rates have been steadily falling since hitting their highest level of the year of 7.8% at the end of October. The average rate is now 6.6%.

🌦 THE GLOOM SQUAD

Every year, the World Economic Forum calls around to a bunch of people who assess risk for a living and say, "hey what's good?" and they all say "not much, man, here's all the fresh hell you can expect this year." And thus the annual Global Risks Report is born.

So it is with 2024, a year in which humanity can expect a lot more misinformation, turbocharged by artificial intelligence, along with the devastating effects of climate change.

According to the report published Wednesday, nearly two-thirds of respondents (more on them in a minute) expect an "elevated chance of global catastrophes" in the next decade. About 30% expect the same in the next two years, my colleague Hanna Ziady writes.

Note: The report does not define a "global catastrophe." It describes "global risk" as an event that would "negatively impact a significant proportion of global gross domestic product, population or natural resources."

Long story, short: The outlook is gloomy.

Targeted disinformation, especially around the elections, and extreme weather are likely to be defining macro themes. (The report makes no mention of doors falling off commercial jets in midair, people bragging about their Dry/No Spend January, or Jo Koy's opening at the Golden Globes, but I'll offer up those additional concerns I have about the overall vibe of 2024 thus far.)

MY TWO CENTS

The headline of the risk report contains the kind of extreme negative sentiment that quickly morphs into social media meme-ery and mockery. LOL the world's on fire and I'm just watching DIY home renos on TikTok...

And I get that. It's a popular coping mechanism for folks raised with both the internet and a seemingly constant threat of doom. Best of times, worst of times, etc.

But it's worth digging a little deeper into the report to note a couple of things.

The report is based on a survey of nearly 1,500 risk experts — primarily consultants for businesses, but also academics and government advisers. These are people who are paid to think about risk all day. What's the old saying about cognitive bias — if your only tool is hammer, everything looks like a nail?
It's not meant to be a crystal ball. As its authors note, we're only doomed if we let fatalism take root. Disinformation and AI and economic inequality are not foregone conclusions. Climate change is perhaps the biggest existential threat — all the more reason to mobilize and devote unprecedented financial and intellectual resources to mitigating its effects.

Bottom line: Apathy won't help.

"The future is not fixed," writes Saadia Zahidi, managing director of the WEF, in the report. "It is our hope that the report serves as a vital call to action for open and constructive dialogue among leaders of government, business and civil society to take action to minimize global risks and build upon long-term opportunities and solutions."