GDP Growth, Inflation By Choice, XPrize

GDP growth is fairly substantial

GDP is used as the topline scorecard for a country’s economic health. This week US Q3 2023 GDP was revised up to 5.2%, up from 4.9% on the first announcement. The third and final revision will be in December. People generally respond positively to round numbers and seeing a number over 5% is a positive surprise. When you add in the official US inflation of 3.2%, you get a positive % real GDP growth rate of 2%. Remember that GDP fell by -30% during the onset of Covid. Even with the -30% Covid drop, GDP is up from 21.9 trillion in Q4 2019 to 27.6 trillion in Q3 2023, or a 26% increase. There are many obvious and well-documented problems, but real data says we are in good shape, and GDP growth figures support that narrative even with a decent margin for error. Of course, you can’t mention growth in the US without mentioning government support, which comes in many slippery forms. For example, while the Fed has actively been working to reduce its balance sheet, the US government has been increasing its massive budget deficit. Those two effectively cancel each other out.

Inflation by choice

In 2022 and 2023, we saw in real-time that many companies were able to preserve their earnings by significantly reducing headcount. In 2024, we will begin to see just how much choice consumers and businesses have in how and where they spend their money. My initial term for this is “inflation by choice.” While headline inflation might not be coming down, a fair number of deflationary forces are at play for those who choose to opt in. I’m calling it inflation by choice because it requires a change in consumer behavior to benefit. It seems that those changes are happening.

For the consumer, Temu and Shein are prime examples of deflationary forces. Temu has been the #1 iPhone app for the past year. It’s a safe bet that no one reading this has used Temu, but your kids might have. The products offered on these platforms are similar to those on Amazon Basics, Costco, CVS, Target or Walmart. Prices in Temu are shockingly low: 10 toothbrushes for $2.5, a pair of basic athletic sneakers for $9, and 20 pairs of socks for $7. I’ve tested it, and it’s roughly the same quality as any generic brand. It’s not exceptional, but it doesn’t crumble after a few uses, like you might suspect.

Temu is an inevitable conclusion for e-commerce in that it connects Chinese suppliers directly with consumers, further cutting out the middleman. Apps like this have existed in the past, like Alibaba or Ali Express, but Temu is the latest and best iteration of successfully connecting online buyers and sellers globally. Interestingly, despite being a major Chinese company, their headquarters are in Boston. I won’t comment on the economics of the parent company. For consumers willing to change habits to fight inflation, apps like Temu are a gift.

Working from home is another deflationary force for the consumer. Commuting is expensive, and real estate prices closer to urban centers are much higher. Only some have the option, but working from home is often significantly cheaper than the alternative. Companies are incentivized to sniff out these same deflationary opportunities while under pressure to produce more earnings. Consumer changes like these leave more room in the budget for other things, like holiday flights. I’m sure everyone has seen that the TSA had its highest traveler throughput this past Thanksgiving. Not everyone is willing to change, but enterprising inflation-avoiding people and companies have more choice than ever.

XPrize in Longevity Health

This week, the XPrize organization announced a $101m prize for anti-aging technology focused on restoring muscle, brain, and immune function in adults over 65. Peter Diamandis, the founder of XPrize, is always an interesting person to follow when thinking about futuristic technology and disruptive frameworks. We last wrote about XPrize’s remote robotics avatar competition, which awarded $10m to the best team to transport human presence to a remote location. In the grand scheme, $101m is not that much money, but the XPrize has historically raised awareness and pushed the limits of imagination.

On the hobbyist side of longevity science, Bryan Johnson spent over $2m of his money developing his anti-aging protocol. It’s pretty extreme, but I picked up a few reasonable habits from his work. You can read his documentation or his new book here.