2020 forecast for the climate, TV, sports, the Supreme Court, more
The economy: Trouble ahead
By Edward E. Leamer
With some reliable precursors to recession blinking bright red, it seems safe to make this prediction: There is an economic downturn in your future.
For one thing, at 126 months, this is the longest economic expansion on record. Old age alone may not be a reliable indicator of end of life, but with worries about trade, an already troubled manufacturing sector and a shaky bond market, some economists think a new recession could start as early as next year.
Whether the downturn comes next year or in five years, it’s time to prepare.
Recessions are periods of weak sales, weak cash flows, weak job markets and declining prices for homes and stocks. The worst way to enter such periods is with a heavy debt load premised on overly optimistic ideas about future earnings and future asset values. In a recession, lenders tend to be impatient. What you don’t want is to have to sell off assets at bargain prices. Delinquency, default and bankruptcy are often the only options for those entering a recession with excess debt.
With recession risks elevating, use the new year as an incentive to perform a personal stress test. The first step is to ask this question: Is your family or business relying on income from jobs or sales likely to be threatened in a weak economy? In the midst of economic distress, folks don’t need to buy new cars, houses or even shoes. If you or other family members are in the business of producing, distributing or selling these kinds of durable items, you may have significant recession risk.
On the other hand, services such as healthcare, education and food aren’t as easy to postpone and do relatively well in recessions. Consider diversification. A family with one earner in construction could use the security of another earner in, say, healthcare.
Also, ask yourself if you’re replaceable by technology. During expansions, firms tend to focus on expanding sales and not so much on controlling costs. When the recession hits, the focus turns to cost control, which often means layoffs. In our new technological environment, when firms start hiring again, they may hire a robot instead of a person. Take a close look at your workplace to determine whether there’s a robot risk, and look to develop skills robots don’t have. That will both lower your layoff risk and increase your rehire probability.
And finally, look at whether you have debt service obligations that depend on at-risk earnings. If yes, consider selling some assets now to retire some of that debt. Borrowing can be a great idea early in an expansion but a bad choice when the expansion ends. Cash is king in recessions when asset prices are plummeting.
Edward E. Leamer is a professor of management, economics and statistics at UCLA.
Entertainment: Disruption in full force
By Jeffrey Cole
The next 12 months will see the most important change in the history of the entertainment industry since the television era began in the 1940s. The disruption is in full force.
Once again, Netflix — after moving the DVD rental business from the corner store to our mailbox and then pioneering the streaming business — is changing everything.
In November, Netflix released “The Irishman” online less than a month after its theatrical release. The same is true this month for “Marriage Story” and “The Two Popes.” Although films aren’t being released to moviegoing and home audiences on the same day, the gap is closing. We can watch major motion pictures likely to contend for Oscars as part of our monthly $10 Netflix subscription.
Theaters can’t compete. The line separating movies from television has completely blurred. “Dinner and a movie” has become Netflix and Uber Eats.
Television viewing habits also have changed dramatically. Viewers under age 30 watch only 15% of their television live, according to USC’s Center for the Digital Future. The other 85% is recorded or streamed. We have come to expect television on our terms.
Until 2017, studios were thrilled to sell their old theatrical and television content to Netflix. WarnerMedia could command $100 million a year from Netflix for “Friends,” a TV series that hasn’t had an original episode in 15 years.
Then the studios realized they had created their biggest competitor. Two years ago, Walt Disney Co. Chief Executive Bob Iger made a difficult decision: Disney would no longer sell content to Netflix. Warner and Universal followed. Shortly thereafter, seemingly everyone in Hollywood announced their own streaming services to compete with Netflix, Amazon and Hulu.
In 2020, television viewers will get burned. All the content we have been getting for years for $10 a month will soon cost closer to $50 as the fees for the recently launched Apple TV+ and Disney+ and other new services add up. We’ll also see the launch of HBO Max (forecast to cost about $18 a month) as well as Universal’s ad-supported Peacock.
Most households will subscribe to 2.5 services. Viewers will constantly switch services to get the content they want. This will probably mean the end of binge-able new shows, since streaming services will release episodes weekly to hold onto subscribers as long as possible, a trend that’s already begun.
Traditional broadcast and cable television cannot compete and will increasingly move toward sports. But eventually Amazon, Google, Facebook and Microsoft will outbid them for those rights. At that point, the broadcast model will enter its final phase as live, linear television.
Viewers will win big. We’ll have almost complete control over more and better content. We’ll have TV and movies anytime we want. And by this time next year, we’ll be adjusting to an entirely different entertainment landscape.
Jeffrey Cole is director and CEO of the Center for the Digital Future at USC Annenberg.
Climate: Dismal certainties
By Bill McKibben
If only it were hard to figure out the climate future.
As a study released earlier this month demonstrated, the climate models that were produced in the 1980s have been remarkably accurate: The scientists knew what was coming, they gave us ample warning, and then we ignored it. So now we’re suffering the consequences. It’s really not that different from, say, smokers who were told cigarettes would cause cancer, paid no attention, and now find themselves in chemotherapy.
But lung cancer just kills us. Climate change, by contrast, offers a series of ongoing crises that will grow worse — unpredictable year by year but, in general, easy to forecast.
Warm air holds more water vapor than cold, so in arid areas you get evaporation and drought. And if there’s something flammable in the neighborhood — well, California can expect its plague of fires to grow worse. The San Francisco Chronicle, earlier this autumn, wondered if parts of the state might be becoming uninhabitable. It’s a question that’s going to wax, not wane.
Meanwhile, what goes up must come down: if you live in a wet region, buckle up. Sometimes that’s California, too: The latest data indicate that those atmospheric rivers of floodwaters are likely to grow ever more common.
So much of global warming is locked in: We’ve raised the planet’s temperature 1 degree Celsius already, and even if we do everything right from this point on, we’re likely to get close to 2 degrees Celsius (there’s a serious lag time between emitting carbon and feeling the effects).
That would be very bad — but of course we’re not doing everything right. We have a president who believes climate change is a hoax invented by the Chinese and is trying to prop up the coal industry. His friends running Brazil and Russia and Saudi Arabia are just as committed to a carbon-intensive future. On the business-as-usual path they favor, the planet’s temperature will rise 3 degrees Celsius, and the consensus among scientists is that our current civilizations probably can’t survive that kind of heat. The U.N. estimates such a scenario could produce a billion climate refugees — given the political panic that a million refugees along our southern border has produced, it’s easy imagine a sad and chaotic future.
But of course there’s one unknown — how many people will rise up to demand change. The past year has given some cause for optimism, as young people streamed into the streets. But will their parents follow? We’ll know more by Earth Day in April, when, among other things, big protests are planned at the banks such as Chase and Wells Fargo that keep upping their lending to the fossil fuel industry. If we’re serious about change, those protests should be a sign.
Bill McKibben, cofounder of the climate campaign 350.org, is the author of many books and a faculty member at Middlebury College.
Sports: Bet on more betting
By Bill Dwyre
When the Supreme Court ruled last year that the law against sports gambling in the U.S. (everywhere but Nevada) was unconstitutional, the door cracked open and a flood followed. Now, in one form or another, more than one-third of the states have jumped on the sports gambling train.
California has been among the quieter states on the issue, but billions of dollars in taxes and bets are at stake, and 2020 could be the year that we decide, via ballot measure, how much we want a piece of that action.
State legislators Adam Gray (D-Merced) and Bill Dodd (D-Napa) are attempting to light a torch for sports betting here. But it will be complicated.
We have 16 pro sports teams. They salute different commissioners, who worship different agendas.
We have 69 Indian casinos. A coalition of Native American tribes has said Californians should have “the freedom to participate in this new activity” but only at “experienced gaming locations.”
We have four major thoroughbred horse race tracks, with betting machines easily convertible to other sports. They not only covet the additional revenue but are also looking for anything that might change the current conversation that says they are places that kill horses.
If California moves forward on sports betting, will it allow only on-site wagering at casinos and race tracks? How about card clubs? Or maybe Laker fans could tap a gizmo at their seats to put down $50 on who makes the next slam dunk? Or could people sitting at home on their couches with phone in hand dominate the action?
The devil will be in the details — and in the potential for huge profits and state tax revenues. And the driving force will be the same one that drives all pro sports and most major college sports programs. Greed.
The pro leagues pretend to hate sports gambling, but they won’t resist as long as they get their share. Illegal betting already helps drive their revenues as more fans tune in, buy jerseys and pay for tickets. Now they are pitching a plan that would get them paid for protecting the “integrity” of their games. Giggle.
With few exceptions, don’t expect a principled peep from the major colleges either. They don’t even bother anymore with the old “building character” stuff. Hard to build character when the best players seldom stay around to march in cap and gown. Just bring on the March basketball brackets and the college football playoffs and pay us.
Sports gambling will soon run amok and nowhere more than in sports crazy California. Bet on it. Make your wagers now on who among your heroes will turn out to be the next Shoeless Joe Jackson.
Bill Dwyre is a former sports editor of The Times.
The Supreme Court: More politicization
By Melissa Murray
In 2019, still reeling from the retirement of Anthony Kennedy, its “swing justice,” and the bruising battle to confirm Justice Kennedy’s replacement, Brett Kavanaugh, the Supreme Court kept its head down and tried to stay clear of politics and controversy.
This was no mere exercise of judicial modesty. Remaining above the political fray is vital to the court’s legitimacy. Unlike the president, who wields the power of the sword, and Congress, which has the power of the purse, the court has no real way to enforce its decisions. Its power as an institution depends on the public viewing its work as divorced from politics.
Which is why 2020 will prove especially challenging for the court. This term, the justices will decide cases involving a variety of highly politicized issues — DACA and gun rights as well as abortion and the president’s desire to withhold his financial records from state and federal investigators. And it must decide these cases in the face of a presidential election, which will make it more difficult for the court to maintain its veneer of nonpartisan neutrality.
The court has faced this test before. Its 1857 decision in Dred Scott vs. Sanford sought to settle the question of slavery for a country that was deeply divided on the issue. It didn’t work. Dred Scott is widely credited with precipitating the Civil War. Likewise, when the court decided Bush vs. Gore, it was accused of handing the 2000 election to George W. Bush. Perhaps mindful of these earlier episodes, in 2013, as the question of gay marriage raged, the court took a more Solomonic approach, with better results. It struck down the Defense of Marriage Act while declining to address the more vexing question of whether the Constitution required the legalization of same-sex unions. Splitting the baby, it seemed, ensured that the court was not viewed as committed to a particular ideological outcome.
The issues the court faces in 2020 could well be decided in this fashion. For example, in a challenge to a now-repealed New York City gun licensing law, the court could avoid the pitched question of gun rights versus gun control by concluding that it lacks jurisdiction to decide the case, leaving the issue for another less politically fraught day. But not all of the cases before the court may be sidestepped so easily. In 2020, the court will have to work harder than ever to thread the jurisprudential needle if it is to maintain its legitimacy and standing among the branches of government — and with the people.
Melissa Murray is a professor of law at NYU School of Law.
Homelessness: It’s personal
By LaVonne Ellis
I’ve been a van dweller for several years, so homelessness is personal for me. I’d like to think that California’s homeless crisis will improve in 2020, but my outlook is decidedly mixed.
Here’s what won’t happen. The Supreme Court recently refused to consider whether human beings have a constitutional right to sleep in public when they have no place else to go. This means sidewalk encampments won’t be going away anytime soon. California cities will have to continue to scramble to figure out how to accommodate their homeless populations. The state’s new rent cap, which also requires just cause for eviction, will help keep more people from winding up in tents, cars and RVs on city streets, but appropriations to build more affordable housing won’t spur enough construction in the next year to stem the tide of homelessness.
I’d like to see California cities take up ideas that have worked in other places. A 2016 study of Chicago residents at risk of becoming homeless found that those living in a household that received a single cash infusion of about $1,000 were 88% less likely to be homeless three months later. A national program called Built for Zero, which uses a data-based approach to help figure out exactly who needs what services, is making a serious dent in homeless statistics in dozens of communities. The United States Interagency Council on Homelessness reports that 78 communities have eliminated veteran homelessness and four eliminated overall chronic homelessness — so it can be done.
If other places can do it, why can’t California? Well, we seem to be trying.
It’s encouraging to see that Gov. Gavin Newsom’s task force on homelessness appears to be aggressively working to solve the problem by creating more ways to get people into housing and treatment, and it’s just getting started. The concept of housing first, in which shelter is made a priority without preconditions, followed by appropriate social services, is also gaining traction across the country. Since July, homeless programs in California that receive state funding have been required to incorporate “housing first” into their approaches. Studies show the housing-first model works.
Efforts like these give me and others a lot of reason for hope over the long term.
But for 2020? To solve homelessness, you need to give people somewhere to sleep besides the sidewalk. Coming up with better alternatives can’t happen soon enough. Not soon enough to save the lives of the three homeless people who die, on average, every day in Los Angeles County. Not soon enough to stop the elderly and disabled from seeing the RVs they call home often being towed away. Not soon enough to make the sidewalks safe again for all of our neighbors, whether housed or unhoused.
LaVonne Ellis is a former correspondent for ABC Radio News Networks.
Restaurants: Treacherous times
By Evan Kleiman
Scanning the list of 101 Best Restaurants recently published in this newspaper, readers saw a microcosm of the city itself. From expensive to affordable, the dining opportunities on the list represent nearly every community and neighborhood in the city. Even though the Jonathan Gold era of restaurant criticism is gone (and sorely missed), it’s a blessing to have two critics working to deliver us information about where and how to eat.
So does this mean the restaurant outlook for 2020 is rosy? Well, yes and no.
Yes, chefs across the city will continue to interpret food in new and exciting ways. But I also fear a financial reckoning is coming that will see the restaurant business contract in a similar fashion to the housing market in 2009. The desire of independent owner-operators to carve out a creative identity is increasingly out of sync with the economic reality of our times.
One reason for concern is that diners have increasingly short attention spans, hopping from one new place to another without becoming regulars — a key to stability in the restaurant business. Also, while a broader range of restaurant investors, including hedge funds and venture capitalists, has brought a cash infusion, it has also sometimes meant less patience on the part of those who back restaurants. We’ve recently seen places close after just a few months, when investors remove support before a business has had time to find an audience. Even ambitious ventures from well-known restaurateurs aren’t immune: Case in point, the announcement this month that the massive Manufactory in downtown Los Angeles closed less than a year after opening.
Today, new restaurants have to jump through hoops with both investors and local government planning departments. Navigating the often arcane process eats into the money, time and energy owners have to build businesses that cater to customers’ quirky habits and tastes and bind restaurants to their neighborhoods.
New eateries have to conform to the concepts they sold to investors, and they have to operate within the permits they were granted. That means that customers often need to conform to what’s being offered, rather than restaurants being able to respond to customers. In the best of worlds, eating establishments both help define their neighborhoods and are defined by their neighborhoods.
I know from personal experience how difficult the restaurant business is. At my restaurant Angeli Caffe on Melrose Avenue, I managed to hang on for 27 years, until 2012, but the last five years were brutal. I saw what was coming, with rising costs of rent, labor and insurance, as well as big changes in the neighborhood. But emotional attachment meant I stayed too long, and I have the debt to prove it.
As the neighborhoods of Los Angeles change, affordable independently owned businesses are disappearing. Angeli was somewhere that retirees sat next to young folks and babies, each happy and comfortable with what we provided. A great neighborhood restaurant brings disparate people together. My hope for 2020 is that mingling of this sort grows; my very real fear is that it will just grow more difficult.
Evan Kleiman is the longtime host of KCRW’s “Good Food” and a member of the James Beard Foundation’s Who’s Who of Food & Beverage in America.
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