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Summary
PSE special report reviewing 2023 and forecasting the shape of 2024. Phil argues that despite 2023 being a troubled year full of bearish noise (“guaranteed recession”, bank collapses, geopolitical conflict, house price pauses), the PSE subscriber who understood the 18.6-year real estate cycle was not surprised. The report argues that something big is indeed happening — but it is infrastructure spending, AI investment, and the second half of the real estate cycle, not the collapse commentators feared. House prices paused in 2023 but wage growth reduced affordability ratios. Going into 2024 and beyond, as the cycle matures, economies will get steadily weaker — the mania phase is underway.
Key Claims
- 2023 was a troubled year full of bearish forecasts (recession, banking crises, rate hikes) that did not materialize as cycle-ending events. — confidence: high
- The pause in house prices in 2023 was offset by wage growth, reducing the house price/income ratio. — confidence: high
- Economic cycles are governed by the law of economic rent: “the economy’s law of gravity — invisible and universal, applying at all times, in all places, to all participants.” — confidence: high
- In 2024 and beyond, as the cycle matures, economies will get steadily weaker even as asset prices remain elevated. — confidence: high
- Bitcoin’s behavior was flagged as a key indicator for the next phase of the cycle. — confidence: medium
- Infrastructure spending and AI investment represent the “something big happening” away from the news headlines. — confidence: medium
Notable Quotes
“The pause in house prices, coupled with another important trend - towards higher wages - reduced the house price income ratio in the US, Australia and the UK (and elsewhere).”
“We know this because it is founded upon the fundamental law of economics, the law of economic rent which “…Is the economy’s law of gravity: invisible and universal, applying at all times, in all places, to all participants.”
“And just as we were able to shrug off the bearish news in 2023 we mustn’t forget that in 2024 and beyond, as we get to the final years of the cycle, our economies are steadily getting weaker.”