Anyone who predicted a recession in 2023 was about as spot on as those doomer astrologists who warned of an apocalypse in 2012.

Most Wall Street pundits spent the fall of 2022 anxiously bracing for an economic slump sometime in the following 12 months. Instead, they were blindsided by various markers of financial strength, like historically low unemployment, solid corporate profits, and even the rising price of cardboard.

Expecting the worst

Bloomberg Economics projected last October that the odds of a recession in the next year were a yikes-worthy 100%. To be fair, that projection didn’t come totally out of nowhere…

• The Federal Reserve hiked interest rates seven times in 2022 (and it planned to continue doing so) in its fight against 6.5% inflation levels.
• Borrowing costs were skyrocketing for the first time since before the 2008 financial crisis, threatening to hamper business investment and suppress consumer spending.

Meanwhile, JPMorgan CEO Jamie Dimon worried that the erosion of consumers’ pandemic savings by price growth “may very well derail the economy and cause a mild or hard recession.”

But the doom never came

The US economy grew at an average annualized pace of 3.2% in the first three quarters of the year, with another 1.3% projected for Q4. Inflation’s decline to 3.1% over the year in November and strong jobs numbers have made many experts (including Treasury Secretary Janet Yellen) optimistic that a recessionless cooling of inflation—otherwise known as a “soft landing”—is upon us.

Not everyone was a Debbie Downer back in late 2022. Moody’s Analytics Chief Economist Mark Zandi was one of the few experts who kept the faith for a soft landing. He pointed out that recessions typically come out of the blue and that there was a good chance the Fed would get inflation under control without tanking the economy.

Zandi recently said that the economy still looks healthy, in part because companies took out loans when interest rates were low, so many of them were able to avoid a credit crunch.

But few saw the vibecession coming…many Americans feel like the economy is faltering despite all the fancy indicators, which some experts blame on high interest payments on consumer debt and the lingering effects of inflation (along with relentless media coverage of them).—SK

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Mark Zuckerberg has been right about a lot of things: People want to look up other people on the internet, fighting Elon Musk is a bad idea, and smoked meat is yummy.

But Zuck’s and many investors’ high hopes for the metaverse in 2023 didn’t quite materialize. Two years after Facebook rebranded to Meta and with $46.5 billion lost since 2019, the metaverse is no closer to success. And 2023 might have been the year to kill it for good.

What’s a virtual world without anyone in it? As of last year, only 200,000 people were active in Horizon Worlds, Meta’s VR world, and Meta has yet to provide an update on that number. And for the ones who are there…it’s not that exciting. Quest 3, the latest iteration of Meta’s VR headset, debuted in October. By many accounts, it was an improvement on the Quest 2. But the problem that’s plagued the metaverse remained: What do you do once you’re in it? Some who entered the virtual world just couldn’t escape the feeling that it was more boring than the real one.

Companies shifted away from the metaverse as the focus on artificial intelligence intensified. While Zuckerberg remained bullish on the metaverse, he paid more attention to AI at Meta Connect 2023, Meta’s annual conference. And, as recently as this month, the company pushed new AI developments, including “Imagine with Meta AI,” an image-generating tool, alongside updates to its AI assistant. Meanwhile, Meta temporarily listed a battery strap for the Quest 3 as “out of stock” last month because the product was so glitchy. The company that renamed itself after the metaverse may end up pivoting to AI instead.

Maybe this time next year, we’ll be talking to you as legless avatars in Horizon Worlds. But probably not.—CC

A widespread prediction for 2023 was that the billionaire who bought Twitter would blow it up, but the only things Elon Musk exploded this year were two spaceships.

While the bird app still hasn’t gone kaput like everyone thought it suddenly would…

• It also hasn’t become profitable like Musk and CEO Linda Yaccarino keep saying it soon could be. Instead, X has lost half its value since the acquisition, and ad revenue is down by more than 50% from last year. That’s partly because only about 5% of previously verified users paid to keep their badges, foiling Musk’s plan to profit off of blue checkmarks.
• Persistent glitches this year and technical difficulties during a much-hyped Ron DeSantis Twitter Spaces event poked holes in Musk’s dream to turn Twitter into a multifunctional “everything app” called X (half accomplished).

On the money. Politicians and advocacy groups warned that Musk’s takeover could lead to a rise in hate speech and disinformation on Twitter/X—and it did. Musk has implemented some platform restrictions on data gathering that have stifled dozens of studies trying to dig deeper into these trends, according to Reuters, but the EU is investigating X under its new tech rules.

Unforeseen: We weren’t creative enough to predict that this year Musk would challenge Mark Zuckerberg to a cage match in “ancient Rome”—and then not follow through. Or that he would tell some of his biggest advertisers to “go f***” themselves for pausing their spending after he endorsed an antisemitic conspiracy.

Looking to next year…maybe in between product meetings about X’s new banking feature, Musk will try to plug his losses with the help of his budding AI company, X.ai, which is seeking $1 billion in funding. But he also said a few months ago that X “may fail, as so many have predicted.”—ML

Headlines at the end of last year had us all thinking downtowns were about to look like The Last of Us. But we never got that devastating, dramatic commercial real estate crash that was promised.

And that was with office buildings emptying. US office vacancy rates hovered around 20% in 2023, a rate we didn’t even reach during the 2008 financial crisis. And cities like Dallas and San Francisco reached rates as high as 25% and 35%, respectively.

So, what gives?

Employees are slowly but surely heading back to their desks. It turns out execs don’t care that you like doing laundry at noon. More companies, including BlackRock, Amazon, and Salesforce, ordered workers to return to offices at least three days a week this year to justify their vast physical footprints. Still, swipe data in the US analyzed by Kastle Systems showed that only about half as many people are making the trip into the office compared to pre-pandemic numbers.

Some companies—including big names like Meta, Publicis, and American Greetings—are getting creative and subleasing space to other tenants.

Not all commercial real estate is struggling. The retail vacancy rate fell to 4.8% in Q2, the lowest in 18 years since real estate firm CBRE started tracking. And big-box stores and malls, shockingly, are so back. There’s also a big demand for warehouses, data centers, and industrial space thanks to the recent surge of AI and the pandemic-induced e-commerce boom.

But another explanation…is that we just haven’t seen the worst of it yet. Within the next four years, about two-thirds of commercial real estate loans will likely be refinanced with interest rates much higher than they were the first time around, according to the Yale School of Management. The delinquency rate for these types of loans is expected to double to about 10.5% in the next few years, according to Moody’s Analytics.—MM

As you can tell by now, a lot of people were very wrong about what would happen this year. But let’s see if you can do any better.

We put together a quick, 10-question multiple-choice poll asking you to predict the major news events of 2024. Questions include:

• Who will win the US presidential election?
• Will stocks go up or down?
• Will Taylor and Travis break up?

Cast your votes here. We’ll reconvene around this time next year to see how you did. Good luck!—AE

This week, we’re bringing you the most-clicked links from the Recs section across the entire year.

Tour the US: What each state would look like as a person, generated by AI.

Watch: How crabs clean dead skin from toes.

Make some extra cash: A step-by-step guide to selling stuff you no longer need.

Happy holidays from space: NASA Curiosity rover sent a postcard from Mars.

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