By Zachary Karabell
Dec. 29, 2023
According to most polls, Americans are ending the year in a sour mood. Trust in all public institutions, ranging from the government to the Supreme Court to the media and the military, is near historic lows. Four in 5 Americans confess to being worried about the economy and believe that it is getting worse. Fully two-thirds of respondents tell pollsters that the country is “on the wrong track.” The upcoming 2024 presidential election seems to depress almost everyone. War in the Middle East and the ongoing plight of Ukraine in the face of Russia’s invasion create a sense of a world in conflict, and the surge in illegal immigration has reached a point where there is an emerging bipartisan consensus that it must be addressed more forcibly.
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And yet, 2023 was a year marked in large measure by movement forward in most of what Americans value in terms of material well-being and marked as well by a surprisingly resilient domestic economy that defied expectations of a recession. In looking at the positive, there must always be the caveat that much has gone wrong. But it says something about our current cultural mood that few seem to feel the need to include the inverse caveat: that there’s much good, if less sensational, news behind the dire headlines of campus unrest, political polarization and global conflict.
So what went right in 2023? The health breakthrough of the year was the commercialization of weight loss drugs such as Ozempic. While many touted the breakthrough’s obvious benefits for weight management, it has quickly become clear that its benefits will extend well beyond waistlines: A world where there is less obesity will be a world of more resilient bodies and bones and less diabetes, which alone is the eighth leading cause of early death in the U.S. It’s no accident that the stock price of companies that make artificial joints and insulin delivery systems took a hit this year. For the preponderance of our history on the planet, humans suffered from caloric scarcity; now, we are suffering from caloric abundance. And now, as is so often the case, we are creating solutions to problems we created.
Another boon in 2023 was that the crime rate went down in the U.S., though you’d never know it from public opinion on the issue. When asked in a December Gallup poll, 77% of Americans said that crime is going up. Regardless of political affiliation, Americans for years have believed that crime is going up both locally and nationally even as it has been falling (with the exception of 2020-21, in the tumult of the pandemic). Significant majorities think that crime rates were lower 20 or 30 years ago when almost everywhere in the U.S. crime was substantially higher.
Yet, in 2023, murders are down nationally by 12% and in places such as Detroit, the rate is at a multi-decade low. In New York City, violent crime is down by double-digits. Even in much maligned San Francisco, overall crime is down 8%. The pace of falling crime has accelerated so much in recent months that David Graham in the Atlantic described what is happening as a “peace wave.” This welcome shift can be explained, he suggested, by a return to something resembling pre-pandemic normalcy, with people returning to offices and daily routines and with the unsettling dislocations of 2020-21 receding into the past.
In climate news, actual trends are also in stark contrast to public attitudes. While a Pew poll found that barely a third of Americans think that enough is being done to deal with climate change nationally and globally, carbon emissions in the U.S. and in much of the developed world continue to fall. In the U.S., emissions are sharply below what they were in 2007, when the issue assumed center stage in global debate, and have decreased from 20 metric tons per capita to less than 15. Trends are similar throughout the developed world, and globally emissions have essentially flat-lined since 2017.
The causes are a mix of technology and digitization combined with a move toward renewables. Non-carbon sources of energy such as solar, wind and heat pumps, in addition to growing energy efficiencies, are being embraced in every part of the world. Digital technologies, despite the sizable carbon footprint of server farms, promise to deliver even more reductions in the next decade as manufacturing becomes more efficient, less resource intensive and more local, obviating some transportation needs.
For Americans, perhaps the most surprising good news of 2023 was on the economic front. Despite the most aggressive Federal Reserve interest rate tightening policy in decades and the end of massive public spending during the pandemic, there was no recession and no rise in unemployment. There is chatter on social media about a “silent recession,” with many Americans feeling that they’re living in a downturn, and there is the confounding fact that in polls almost no one under the age of 30 believes the economy’s strong numbers.
But those numbers are real: U.S. GDP growth is up a decent 2.6% in 2023, and the unemployment rate is nearly back to its lows of 2019, which was the lowest in generations. It would appear that the U.S. economy produced a rare outcome, a true Goldilocks moment: Interest rates rose and inflation went down without unemployment going up.
Even better, wage gains have been outpacing inflation. Those gains only began to surpass inflation in May of this year, which may be why public attitudes have yet to reflect the shift. As of now, average hourly earnings are averaging an annual increase of 4.2%, versus 3.7% for inflation as measured by the Consumer Price Index.
As inflation continues to moderate, from a high near 9% in 2022 to its current level of less than 4% (and heading downward), those wage gains will be even more significant. Wages went up as the tight labor market gave workers the power to demand more income. Those gains appear to have largely stopped, but there is little indication that companies are either willing or able to pare them back.
And U.S. financial markets have shown incredible resilience and strength: The S&P 500 is up 23% as of Christmas, contrary to expectations at the beginning of the year for low single-digit returns. Large technology companies such as Apple and Microsoft have done even better.
Market gains haven’t just benefited Wall Street and the rich; they have directly boosted the retirement savings of more than 150 million Americans. In addition, the upside of the tumult caused by sharply increased short-term interest rates is that for the first time in decades, people could earn some money from their savings and money-market accounts, as much as 5% by the second half of the year, and that also boosted the financial well-being of tens of millions of people.
Finally, as 2023 ends, there may be an upside to the sour mood of publics around the globe. The gap between pessimistic attitudes and often encouraging data reflects an important social and cultural reality: More people than ever before believe they have a right to a better life and a better future and to have their voices heard. No one expresses deep discontent with how things are if they believe we all just have to accept our lot in life.
The refusal to quietly tolerate inept or corrupt governments or economic systems that leave too many people insecure is its own sign that people expect more. In the U.S., the belief that hard work will lead to a better life has been eroded, but it has also been expanded over the past decades to include everyone, regardless of race, gender or sexual orientation. Dissatisfaction is the opposite of complacency—and a necessary condition for change.
Mr. Karabell is the founder of The Progress Network, president of River Twice Capital and the author of 13 books.
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