Let me say at the onset that economic and market forecasters don’t have the greatest track record to begin with. It is not unusual to see their forecasts out of step with what actually happens in the real world. But there’s usually also a contingent that gets it right.

Not this time, apparently. Virtually all the well-known forecasters predicted a recession in 2023. I read a lot of forecasts and not one I saw predicted the economy would grow above 2% in the first half of 2023 as it has, and virtually every one forecast a recession in the second half of this year, with many signaling a serious contraction.

I don’t remember a time when such a broad swath of forecasters were this bearish. I’ve been writing about it all year, while also making it clear that I didn’t share these overly negative views. Regular readers know I have consistently maintained that a recession is not the most likely scenario for this year.

Normally, I focus these weekly letters on one single pressing topic. Today, however, I don’t see one pressing topic to focus on. The record heat wave gripping much of the country seems to be the main topic of interest right now, and that wouldn’t make for an interesting letter. So, I comment on several current issues today I hope you will find interesting. Let’s get started.

Believe it or not, people are reluctant to tell others about their potentially controversial activities. As societies go, we Americans love our privacy. And why not?

Yet this reluctance to disclose can (and does) lead to under-reporting of these activities, which frustrates researchers who keep track of such information. Academics are frustrated that privacy-minded respondents impair their understanding of the world we live in, but that’s just how it is and has been throughout our nation’s history.

In 2022, about 45% of US households had at least one gun in their possession, according to surveys by Gallup and others. Gallup also found that nearly one-third of all US adults own a firearm.

I think it would be safe to say at this point that US equities have outperformed most forecasts for this year and have exceeded most investors’ expectations. As of last Friday’s close, the S&P 500 Index had gained almost 16% for the year. That’s pretty impressive given that most forecasters have been predicting a recession just ahead, and consumers seem to be in a dour mood about things in general.

Today we’ll look at how the equity markets have performed this year and speculate whether this impressive performance can continue. I suspect many of you reading this have your doubts, but I think most of us can agree that stocks have outperformed expectations so far in 2023.

Following that discussion, I’ll offer a few thoughts on why so many forecasters are so negative in their outlooks for the balance of 2023 and, in some cases, beyond. For many of these people, it is just their nature to be negative, no matter the circumstances. Never mind that they are usually wrong – that doesn’t seem to matter.

Finally, we’ll revisit the problem of rising office building vacancies. According to the National Association of Realtors, the US office vacancy rate hit a new record high in the first quarter of this year. If this trend continues, it poses a real threat to the US economy.

In most national elections, especially important ones like presidential elections, most likely voters have a decided opinion on which candidate they support and which one they oppose – and they vote accordingly. This is what elections are all about.

However, the latest polls from CNN and others show that more Americans than ever don’t want President Joe Biden OR former president Donald Trump to be our next president.

Usually, most Americans like one of the candidates running for president and oppose the other. That has been the norm for most of polling history. But not this time, apparently.

According to the most recent Gallup polls, more Americans this year (38%) said they are “very conservative or conservative” on SOCIAL ISSUES than said so in 2022 (33%) and 2021 (30%). At the same time, the percentage saying their social views are “very liberal or liberal” has dipped to 29% from 34% in each of the past two years, while the portion identifying as moderate (31%) remained about the same, near a third.

The last time this high a percentage of Americans said they were socially conservative was in 2012 when President Obama was in the White House, during a period when consistently more US adults identified as conservative rather than liberal on social issues.

The results are based on Gallup’s annual “Values and Beliefs” survey, conducted in May. The survey comes at a time when many states are considering policies regarding transgender matters, abortion and the teaching of gender and sexuality in schools.

The increase in conservative identification on social issues over the past two years was seen among nearly all political and demographic subgroups. Republicans show one of the largest increases, from 60% in 2021 to 74% today. Independents show a modest uptick of five percentage points, from 24% to 29%, while there has been no change among Democrats (10% in both 2021 and 2023).

All year, the mainstream media and those on the left have been predicting a recession for the US economy in 2023. Many have all but promised it. All this negativity has surprised me, frankly, since the left has its guy in the White House and until recently, control of both Houses of Congress. Why are they so negative, I’ve asked myself over and over.

My feeling like a broken record is because I have repeatedly written in these pages this year that I do NOT believe a recession is the most likely scenario. I still don’t. But the left keeps beating the drum, so I feel I have to respond.

On another note, I’ve always said I like to write about the things that interest me the most, and with that said, my thanks go out to the editors at The Economist who recently wrote a great article on American exceptionalism which has been on my mind ever since. The article appeared in April and was entitled “America’s Outperformance is a Marvel to Behold.” The article goes through a laundry list of reasons why America remains the most dominant and successful country in the world and why that’s not likely to change anytime soon.

We start today with some brief economic commentary. Things are pretty quiet right now with all eyes focused on what the Fed is going to do next week at its June policy meeting. With things on the economic front relatively quiet, I’ll shift our focus today from the markets and investing to the long-term weather outlook and a possible record “El Niño” this year.

It is impossible to predict how the Fed Open Market Committee (FOMC) will vote next week. There are 12 members of the FOMC including so-called “hawks” and “doves,” so the vote could swing either way. We’ll just have to wait and see.

Switching gears to our main topic, I have decided to go a little different direction today from our usual focus on the economy, the markets and investing in general. Today, I want to focus on the upcoming weather outlook and the odds for a record “El Niño” this year. I think you’ll find it interesting.

As this is written, it appears we have a tentative agreement to deal with the debt limit which was struck over the weekend to avoid a debt default next week. The deal was reached between President Biden and House Speaker Keven McCarthy and still must be approved by Congress before it becomes law.

Actually, Mr. Biden and McCarthy didn’t agree to raise the debt ceiling by a specified amount; instead, they merely agreed to “suspend” the debt ceiling until January 2025, after the next presidential election. So, in effect, there is no debt ceiling now. This move did not surprise me. We all knew they would come up with something to avoid a debt default.

Which brings up another question: What actually constitutes a debt default? Not surprisingly, there are different answers to this question. While it looks like a debt default has been avoided for now, as taxpayers who fund everything our government spends, I think it is important for us to understand what a debt default is. So, that’s what we’ll talk about today.

But before we get to that discussion, let’s briefly review the latest key report on the economy. The Commerce Department reported last week that 1Q Gross Domestic Product rose at an annual rate of 1.3% versus 1.1% reported in its previous estimate in April.

The news today is dominated by the fear that the US government will run out of money next week and be unable to pay its bills after June 1. The media is warning that the US could default on its debt for the first time in history.

That assumes, of course, that Republicans and Democrats don’t get their act together and compromise on a new higher debt limit by June 1, which I still believe is possible if not likely.

But even if the GOP and the Dems don’t reach a compromise by the deadline next week, it is still possible for the government to continue to operate and pay at least some of its bills beyond June 1. I realize this is not what we’re being told by the media and Treasury officials, and that’s why I’ll explain it today.

Hint: some key facts and figures are being ignored. I’ll tell you what those are below.