PODCAST: The Kiplinger Letter’s 2022 Forecasts
What to expect from the U.S. economy and an election-year Congress, as well as the outlook for cryptocurrency regulations, TikTok and more. Plus, we give the Elizabeth Holmes verdict a think.
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Links mentioned in this episode:
- Kiplinger’s Economic Outlook: GDP
- Kiplinger’s Economic Outlook: Inflation
- Kiplinger’s Economic Outlook: Jobs
- Kiplinger’s Economic Outlook: Interest rates
- Kiplinger on tiktok
David Muhlbaum: 2022. Yes, it's already underway, but we've got more than 11 months to go. Forecasting what might actually happen in that time is what the Kiplinger Letter does. John Miley, a senior associate editor for the Kiplinger Letter joins us to talk about his team's top 10 forecasts. Also, the Theranos trial. Are you fascinated by the tale of Elizabeth Holmes? That's all coming up in this episode of Your Money's Worth. Stick around.
Welcome to Your Money's Worth. I'm kiplinger.com senior editor David Muhlbaum, joined by Kiplinger Senior Editor Sandy Block. How are you doing, Sandy?
Sandy Block: I'm good, David.
David Muhlbaum: Great. Well, our guest today is John Miley from the Kiplinger Letter. And I know you were following the Theranos trial very closely, and that story is one that John was intrigued by. So what we're going to do is bring him into the opener right here, right now. But before I turn the two of you loose on your thoughts about Elizabeth Holmes, I want to try to apply the Your Money's Worth principle: Is there some actionable personal finance advice in this tale?
Sandy Block: Well, probably not, or it would be a stretch, but what we do see are some total failures of due diligence by investors. And that should give people pause about the judgment of the smart money we often look to for guidance, and is it is not always right? And I think there is some relevance. What we saw in the past year was how easy it is now to take a flyer on a stock with apps, such as Robinhood, you can do it for free. And while I don't think Theranos was ever available widely to the public, there are plenty of flashy stocks that are. And just because they're getting a lot of buzz, does not mean that you should put your money there.
David Muhlbaum: Got it. All right. I'm curious what John has to say as well, but maybe John, first off, you can give us the Theranos story in 30 seconds?
John Miley: Well, Elizabeth Holmes, as a 19-year-old Stanford... well, she didn't finish Stanford. She came up with the idea for a device that could take a pinprick of blood and come up with all these results. And it's something that the conventional testing couldn't do. They would have to take vials of blood, and the devices were huge and expensive. And she was able to convince a lot of investors to pour in hundreds of millions of dollars into this company. And it lasted for years. She convinced military people. She convinced George Schultz, former secretary of state, and among other things, to buy into this and be on the board. And basically what happened is the thing was covered a lot in the technology world, and it ended up being largely a scam throughout all the years. And she covered up that it didn't really work. And what surprises me most is how long it lasted. But yeah, I don't know if I left anything out Sandy, but that's how I see it.
Sandy Block: Yeah. I think the thing that I was fascinated by was the suggestion that what she did wasn't all that unusual in Silicon Valley, that whole fake-it-till-you-make-it, that exaggerating what you've invented or what you're selling is how it's done, and that maybe she exaggerated things a bit, but it wasn't all that bad. But I think what separated this from the others was that it was a healthcare device. It wasn't pets.com. It wasn't something that will deliver a new type of video to you. It was something where people could die if they got the wrong information from a blood test. And I think that's what really sort of sealed the deal for her, that she wasn't playing around with some cool tech device. She was playing around with people's health and people's lives. And that really made this to me so much more disturbing, I guess.
David Muhlbaum: And in terms of the Silicon Valley culture, the flip side, it seems to me of the culture of fake-it-till-you-make-it, is the people, the board members, the sort of the smart money, if you will, who are supposed to be investing decisions on behalf of their funds, they're supposed to do the due diligence that breaks through the fake-it-till-you-make-it. So they abdicated some responsibility, too. And it was Theranos and Holmes who were called to the carpet. But I would've imagine... I don't know... What are the repercussions for people who lost other people's money in this? Is there any accounting for them?
John Miley: Some of the investors were individuals, Rupert Murdoch, for example, invested over a hundred million dollars. So she did embrace Silicon Valley culture, idolized Steve Jobs, but some of the venture capital was not conventional traditional Silicon Valley venture-type people. But yeah, I do think they jumped in and didn't do that type of due diligence to see, "Does this work?" or they were in over their heads and swept up by sort of, "Oh, we can fix it in software. This is like an app." And I couldn't agree more with Sandy that, with this healthcare thing, not only is there a lot of regulatory things going on, but it's also incredibly challenging to do some of these things more so than building an app and then fixing it when there are bugs in it.
Sandy Block: And I think one other thing I will add, David, too, I wonder... And I'm not an attorney and I wouldn't even be able to channel one, but what is the board's culpability here? I mean, what was their responsibility to do their own due diligence? As I said, one of the reasons that people were so eager to invest in this company is because she had this incredibly prestigious board, but what is the responsibility of those individuals to go beyond the hype and see what's working and what's not working. I imagine they're going to argue they got scammed along with everybody else. And she was really good at covering her tracks, I think, for a long, long time. But that will be something interesting to see. There's going to be a lot of private litigation long after.
David Muhlbaum: That's what I was wondering about.
Sandy Block: Tons of private litigation is going to go on.
David Muhlbaum: Like, who's suing who, right? How come it hasn't happened already, or has it?
Sandy Block: Again, I'm not a lawyer, but I think if I were intending to sue Theranos, I would wait until after the trial, because that gives you more ammunition in your loss, in your civil-
David Muhlbaum: Yes. Okay. I see. That makes perfect legal sense to this other non-lawyer, okay. Again, trying to come away with... I mean, it's a great tale. I'm not as obsessed with it as you guys are, but lord knows my wife sure is. What are the going-forward lessons?
John Miley: For me, it's always considering that biotechnology is really hard, and there is a regulatory part of this. And sort of these hyped-up things that seem amazing merit a lot of scrutiny. But in general, on the technology front, whether it's a new term like metaverse or something like that, I think these require some investigation if it seems too good to be true. I mean, that's something that comes away, for me. Especially if it's in fields that are over a lot of people's heads, and they don't really sort of know what's going on, but they just see money flowing into it, and they see partnerships happening and things of that nature. But she was very good at hiding that this thing didn't work. It's actually amazing if you read the book. There's so many layers, it's almost hard to talk about what seemed to be happening, at least according to the Bad Blood book.
Sandy Block: Yeah. And I guess just going back to our earlier point, David, I think it's just a real wake-up call for individual investors. Now, in this case, we couldn't buy Theranos on the Robinhood app.
David Muhlbaum: Or at all.
Sandy Block: I think you had to be a sophisticated investor to get in. But this just goes to show that even high-income sophisticated investors can get scammed. And that's a takeaway for the rest of us.
John Miley: She also did try to use her technology during the Ebola crisis. So it's kind of a... I mean, I don't know how much it reflects today, but during a pandemic, during a crisis, there are companies that will come in and say, in her case, "We can test for this. I want to do a government contract. We can do this." Again, like you said, her company wasn't public, and I'm sure public companies have other incentives not to do things like that, but people can take advantage of a crisis.
David Muhlbaum: Perhaps we can breathe a sigh of relief that she and Theranos weren't really operating once coronavirus hit.
Sandy Block: She would've said she could fix it.
David Muhlbaum: Yeah. All right. Well, we are going to come back to some of the things John touched on, like massive inflows of money into uncertain new fields. When we talk about 10 forecasts for the year ahead.
The Kiplinger Letter’s 10 Forecasts for the Year Ahead
Welcome back to Your Money's Worth. For our main segment today, we're going to dig into the Kiplinger Washington Letter's 10 forecasts for 2022. Now forecasting is what the letter does 52 weeks a year, but they have a tradition about a decade old now of doing 10 forecasts for the year ahead at the start of the year. So we're going to continue on with John Miley, senior associate editor for the letter, and ask him about these. Which is his real day job when he's not following the literal trials and tribulations of Theranos.
John Miley: Thanks, David. Great to be here.
David Muhlbaum: If we're reading our history right, this forecast for the year ahead thing, got its start as 11 forecasts for 2011. Now, I bet you're glad we didn't stick with adding one each year.
John Miley: I think it was good to ratchet down to 10 and stay with that.
David Muhlbaum: Well that said, I do see a few other things in this letter that are also forecasts for the year ahead. So, well, we might have a few curve balls for you, but let's get started. As makes perfect sense, your forecasts start out with the economy. Economic forecasting is at the core of the Kiplinger Letter and well, the economy is at the core of all sorts of things. But since the economic forecast makes a reference to the COVID pandemic, I would actually like to ask you about that first, maybe in part so that we can get it out of the way. Haha. We're coming up on this end of the second year of the pandemic. So let me just ask flat out: Does the pandemic end in 2022?
John Miley: We are saying that there is a turning point here, which we're calling Learning to Live with COVID. So we think there is a more normal state of affairs. So I do think that marks something optimistic and positive with what we were thinking. And we have a few reasons for that. And I know right now it seems like the pandemic has dragged on, and omicron cases are surging, but we are looking for the surge to likely suddenly, which would sort of be one of the smaller turning points for the year.
David Muhlbaum: Got it. So “learning to live with COVID” is kind of your term. Pandemic, we'll leave that to the WHO, who came up with it anyway.
But John, isn't one of the reasons for optimism is that you're saying that omicron, as bad as it seems now, is basically going to edge out the more serious delta strain, and that's how we sort of become able to live with the pandemic?
John Miley: Yeah, that's right. And then other virus variants, though they'll definitely emerge, they're likely to be less dangerous. And I mean, it's the idea of becoming endemic, which was talked about at the beginning, by some of the smart public health people, that the idea that this could be like a flu-season thing, but this year being the year that it starts to be thought of as that, with vaccines widely available, more drugs coming available that can help, hopefully rapid tests becoming available. We mentioned that too, as being a big part of this, having the ability to test yourself, to figure out, are you infectious? Do you have it? Do you need to stay home? Do you want to see family? So part of that too, because during the holidays, people had a hard time getting testing, which it's a tool in a toolbox. It's not everything, but all those things.
And then the other thing would be just so many people having it, just general, more people having antibodies and immunity or some levels of that. And then vaccinations continuing with children and more people. So those are the positive signs. What that means is that eventually consumer confidence comes back. Where infections go down, people see that, more in-person activities. Because now the supply-chain crunch, it's people buying lots of goods. They're not going out as much. So that's restaurants, movie theaters, bars, and, it's varied across the country, of course, but we're looking at the macro picture of the country, if those can come back up. I mean, that's part of what we think of as coming back to normal. I've also forecasted the movie theater industry this year could return to a more normal state of things as it was pre-pandemic. So in terms of box office revenue, people actually going to the theaters, that's one example of this.
Sandy Block: Ooh, I would like that because I'd like to go to see West Side Story, so that's good to hear.
So, in terms of that viewpoint of what the pandemic will look like and how it'll affect the economy and consumer confidence, let's go to the hard numbers. Let's talk about the economic forecast itself now that we have a sense of how the pandemic fits into it. What is the letter forecasting for GDP growth in 2022?
John Miley: So 4.0%. And when we say a rapid 4.0%, that's slower than '21, which is 5.6%, but that's still rapid growth. Though we do say, it's going to start the year slow because we're having the surge happening and people being nervous, and that's reflected in how they spend and things like that. But we think it will speed up as the pandemic recedes. And like I said, that's going to show up the most in that service sector, the restaurants, the movie theaters. Although, we also think manufacturers will keep going strong. Some of the things that matter to that are the computer chip shortage could ease. That's really important with car manufacturers that just can't find, computer chips for their cars. The cheap computer chips are holding up their expensive cars that they can't sell. So those are some of the factors going into that.
David Muhlbaum: That rebound for the restaurant and service sector depends in part on finding people to work in it. So I would ask the next thing would be like, what is going to happen with unemployment and job creation?
John Miley: That will stay tight. We say unemployment at a 3.2% level or below by year end.
David Muhlbaum: That's 3.2%. We haven't seen that since... Well, I don't know when we haven't seen it.
Sandy Block: Ever.
David Muhlbaum: Ever! Right. Record low unemployment is what we're talking about here.
John Miley: And then that's going to push up wages once again, not quite as much, we don't say as the 5% wage rise in 2021, but we're saying for 4% wage rise. So it's going to require businesses forking over more money to get these workers. Because I mean, one thing we keep writing about is shortages in all sorts of industries and how hard it is to get, to find, and keep workers.
Sandy Block: Which leads to the other big number we want to ask you about, John, is what is going to happen to inflation in 2022? 90% of my mail these days is about price increases. It's top of mind for everybody. What are you all seeing happening in light of what you just said about a tight employment market and higher wages, what are we going to see?
John Miley: I was looking what it actually ended up last year to remind myself and I think it was 6.9%. So yeah, it's pretty clear why it's really on people's minds. We say starting the year high, falling below 3% by year end. So people looking at this, I mean, not good that it starts high if you're worried about inflation, but the idea that it will be falling down is good news for lots of people in businesses.
Sandy Block: And what factors do you see causing inflation to sort of ease off?
John Miley: Part of that is some good news on the supply-chain issues. We do expect major improvements, though there'll still be issues throughout the year. So as that gets smoothed out, that could tamp down inflation in some areas. And then the other thing like we've and talking about, is that people shifting gears back into the service sector. So they're not just buying all sorts of goods, they're going into things that aren't quite as affected by a supply-chain crunch. Whether you go to the movies, the restaurants, those things aren't impacted by ports in LA being clogged and trying to get containers off ships and truck them to places. So that will level out spending and that could ease in other areas. So that's a big part of it, I think.
David Muhlbaum: When we talk about inflation, we tend to talk about interest rates, the other I-word. And when we talk about that, we're looking to the Federal Reserve to take action, to potentially save us from this inflation. What is the Federal Reserve interest rate outlook for the year ahead?
John Miley: We're saying four short-term interest-rate hikes.
David Muhlbaum: Four?
John Miley: Four, and likely in March, June, September, December. And this is even though the Fed still thinks that inflation's going to cool off, but they're worried about the self-fulfilling prophecy of consumers beginning to continue to expect it and paying higher prices and workers continuing to expect ever increasing wages. So I mean, that is on their mind. And I also think that the omicron surge throws a wrench into that too into their thinking, but that's what we're saying. So that's definitely a change of things for the Fed.
David Muhlbaum: It's been a long time since we've had a real sort of series of interest rate hikes, I guess they call it a cycle? I mean, I'm asking a lot of wonky Fed detail, but do you know when the last time they did four in a row?
John Miley: That's a good question. I'm not sure. I know that the major focus has been looking at this unemployment rate and clearly things have changed for them.
Sandy Block: So we don't usually talk about politics on this podcast because we're scared...
David Muhlbaum: We don't like hate mail!
Sandy Block: We're scared, but that is on your forecast list. And obviously who is ever in charge of things does affect the economy and pocketbooks and things like that. So, John, can you talk about what you're seeing in terms of the midterm elections, which are going to be here soon.
John Miley: Sure, yeah. 10 months away, and we're talking about as things stand now and we always know that everything can get shaken up by something big and things can change, but we're looking Republicans to take the House. Democrats have the house now. We're saying Republicans take at least a 10-seat lead in the Youse after the November elections. So, that would flip the Democrat's current slim nine-seat advantage. And we just think that Democrats face a lot of obstacles. Redistricting has helped Republicans and President Biden's polling numbers are not looking good right now. And we also look at the history of what happens in a midterm election in this type of scenario. We also think about what the Democrats are trying to do in Congress and that some of their voters may be frustrated that they're not getting all the campaign promises done. I know the Democrats still have some time and they're still working on the Build Back Better, which we're writing about a lot, but there's still frustrations among their voters.
Sandy Block: So we’ve got a bunch of Democrats retiring and also some redistricting, and that could also play a role in the upcoming election, correct?
John Miley: Yeah. And it's also a sign that Democrats see that they could potentially lose or they feel like they could lose. Some of them, their maps have been redrawn, so it's tougher for them to win. Others are just saying like, "Look, I might not want to be here if we lose the House." It's not as, I guess fun, for lack of a better word, if we're in the minority party.
David Muhlbaum: And the big name that would retire if the Democrats lose the house is... John?
John Miley: House Speaker Nancy Pelosi.
David Muhlbaum: So that would mean, based on the forecast, the next House speaker would be...
John Miley: Kevin McCarthy.
David Muhlbaum: Kevin McCarthy. Okay. But, and again, sticking with the forecast, but okay, who would take Nancy Pelosi's place that is now as minority leader?
John Miley: The best bet is Hakeem Jeffries of New York. So basically he would be holding the minority position under the GOP control.
David Muhlbaum: All right. So that's the House picture, and the Senate?
John Miley: Right now, it's 50/50 with Kamala Harris, the tiebreaker, but we think the edge goes to the Republicans, though we think this is a closer call. So from 50/50, we're thinking that they're going to take a slight one to three seat advantage in the Senate. So basically, obviously now you have Republicans taking over both chambers.
David Muhlbaum: Right.
John Miley: And Biden left in the White House, dealing with a Congress that's Republican led.
David Muhlbaum: And okay. And even before that... We can imagine what that's going to look like legislatively just on the face of it. But remember, we're talking about the year ahead here. So let's talk about what Congress will, or maybe won't do in 2022. They're all kind of looking ahead at the election, what's the legislative outlook in that kind of year?
John Miley: We're thinking more gridlock as a lot of politicians turn to the elections. Election year, sometimes by summer, they stop focusing on major bills. And there's some smaller things that we're thinking about such as, maybe something on a COVID-type package, there's talk.
David Muhlbaum: More relief?
John Miley: More relief for the restaurant industry. Right now, that's talk, but that I know that's something that our political reporter continues to follow, but for the most part, lots of bickering and partisan fighting. And we don't see many major things, major agreements, major things getting done the year ahead.
Sandy Block: John, I want to switch to something that's a little bit more in our area, and that is cryptocurrencies. I get about as many emails about that as I do about inflation, and I wonder what your forecast is with respect to that very interesting segment of the market.
John Miley: A lot more scrutiny is in the cards this yea. I mean, it's been scrutinized, but we think it's going to kick into higher gear. We talked about last year, lots of rise in crypto. As someone who covers technology myself, it's cryptocurrency beyond just the investment and speculation, it's just filling up everything about the tech field. But we think more enforcement action, not from just the U.S. But from global regulators. And we also mentioned that stablecoins, which attempt to offer price stability. Although I wouldn't even be surprised if one of you might know more about stablecoins than me at this point.
Sandy Block: No.
David Muhlbaum: No.
John Miley: Some additional. Those are among the top targets. I know some senators have talked about those.
David Muhlbaum: Well, in terms of the regulatory environment, I mean, one thing we have talked about or seen in the past year is that there are tax consequences to trading cryptocurrencies, and that individuals who hold them and trade them are facing a tax-reporting requirement of capital gains and losses. And when you say in the letter that U.S. Lawmakers are eyeing tax regs, such as restrictions on capital loss deductions, does that mean specifically for Joe Bitcoin, that he might not be able to deduct a loss if bitcoin crashes in the next year?
John Miley: That's what I believe, although I'm not 100% certain on that.
Sandy Block: I'll just throw in here, because I'm working on our tax coverage already, because April 18th this year is going to be here before you know it, that the IRS is definitely paying a lot more attention to cryptocurrency transactions and reminding people, including putting a line on Form 1040, that you are supposed to report your capital gains in cryptocurrency, that it is treated just like any other asset. Even if you use it to buy a car, you still have to pay taxes on any gains. And there are a lot of people sitting on a whole lot of gains. And I guess some platforms are now even sending people 1099s or some form, but that doesn't get you off the hook if you don't get one. I think at the very least, it seems to me like on the enforcement side, the regulatory side, there's going to be a lot more scrutiny because there's a whole lot more money out there that people could be paying taxes on.
John Miley: Sandy, this might be an apocryphal Reddit thread, but I've also seen that some crypto investors get the gains, spend them all and don't realize they may have to pay taxes.
Sandy Block: Exactly, and there's a lot of confusion about this because Bitcoin and other cryptocurrencies, while they are currencies, they are also considered assets for purposes of taxes. So even if you say you bought some Bitcoin a long time ago and you spend it, people may think, "Well, that's just like a dollar. You don't pay taxes on... You know, if you got money in your mattress and you take it out and you spend it, you don't pay taxes on that." But cryptocurrency and Bitcoin is an asset and you do have to pay taxes on the gains, no matter what you did with the money. And I think that's what there's a lot of confusion about, especially now. And this is what I learned in my reporting for our tax cover is we have a lot of newbies. A lot of people bought Bitcoin for the first time last year or cryptocurrency or one of them. And they don't understand that these do have tax consequences.
David Muhlbaum: Since we've been talking bitcoin and since John said Reddit, I'm going to ask about the social media platform that got into the letter and that is TikTok. And this one just frankly, it makes me feel old because I'm on almost everything but this one. And this one, it seems to me, I'm just leaving to my children. John, are you on TikTok?
John Miley: I'm not on TikTok, and this is not on TikTok either, right?
Sandy Block: Not yet.
David Muhlbaum: No, this is not yet on TikTok. Although Kiplinger, we do have a TikTok presence. Big creds to our summer intern from last summer for getting us going there. Okay. So grumble as we will, it's growing fast, right? It's growing faster than its competitors. John, what's the outlook for TikTok, and broadly, what's the outlook for social media regulation because there were hearings, there was plenty of chat about that in 2021. Is anything going to happen in 2022?
John Miley: In a lot of ways, TikTok is going to lead the way in important metrics of growth this year once again. And it's pretty incredible how big they've gotten in the U.S. I was looking and last I saw they had 80 million users, I think in October. That's monthly users in the U.S., Which was approaching Instagram levels of 119 million users. Facebook has 180 million. Anyways, TikTok is big. They've come to be a real competitor against Facebook, Facebook-owned Instagram, the two big ones, and then Twitter and Snapchat, those ones. They have a billion users worldwide. And so it's pretty incredible how fast they've grown. They show that it's not a market that doesn't change. People can enter and compete because people like it. Young users especially love this photo-sharing app, short clips backed with music. Infectious, when you look at it, you can't stop scrolling.
I've talked to our young interns and they say, "Oh yeah, TikTok's better. It just is." And then they'll give me good reasons, but they just think it is better than Facebook or Instagram or YouTube that tries to copy different features of TikTok. And it's a big deal because they're going to start making... I mean, they're competing for ad dollars, e-commerce. They're making lots of money. Facebook is getting worried about this because they're growing with the ever-important young market and they're growing faster. But one thing that none of these companies have to worry too much about, I don't think, is major federal regulation that would crack down on them this year, that would really hinder their business. I don't see that this year in, like we've talked about, Congress may not get many big things done. There's plenty of ideas out there and they're arguing about it, but I don't see them coming up with something that they agree on and they pass that does a big crackdown on the industry.
Sandy Block: But I think you mentioned in the letter that maybe some states will do some things around the edges there?
John Miley: Yeah. Some states are targeting. Florida has targeted, Texas has targeted social media companies, whether it's for censorship or... So in other words, trying to get them not to censor things.
David Muhlbaum: Isn't that just going straight to the courts? That just seems like a federal, state regulatory nonstarter.
John Miley: Yeah. I've basically written that a lot of these face, just the First Amendment. They're going to run into that, which allows these businesses the ability to sort of regulate. I mean, there are other things you could do, you can think about privacy regulations. States are suppressing more privacy regulations.
Sandy Block: Which California did, I believe.
John Miley: Right. You could pass maybe transparency regulations or something along those lines. I'm sure they're thinking about different things. So I would expect more state laws to take effect, but I do think some of those are going to go to court.
Sandy Block: Anything affecting content seems really difficult to get passed.
John Miley: Yeah, for sure.
David Muhlbaum: John, a word that you said a few times up till now has been semiconductors, chips. And in 2020 and 2021, we experienced, certainly in the car industry as you mentioned, the impact of expensive vehicles not being able to come to market because of inexpensive chips. So is that going to get fixed, and if so, how?
Sandy Block: Yeah, when can we buy a car? That's the big question.
David Muhlbaum: At a reasonable price.
Sandy Block: I need a car!
John Miley: I was going to ask David the same thing. Yeah. I mean, we've called for it to ease. I mean, one thing amid this chip shortage that we've looked at for this top 10 is money, just venture capitalists are pouring money into startups that design chips. So they don't build the plants that manufacture them, but they develop new designs. And one of the things that's happening in the chip industry generally, is there's not a one-size-fits-all chip. There's more specialized, different type of chips. So there's a lot of room for innovation. And I do think to your point, it may not be as quick as car buyers want, but I do think some of this money in these promising startups are going to focus on analog chips that would go into cars. How long that takes, I'm not sure, but that would be promising if you take a longer view, I guess for the years ahead.
Sandy Block: I don't have that much more time on my car.
David Muhlbaum: And I think I'm going to try to explain this one because when I first heard the term, I kind of said, "a what?" But an analog chip is the fundamental idea of taking something that's analog, like you talking to your car and turning that into digital information that it can do something with, right?
John Miley: Yeah, sensing something from the real world.
David Muhlbaum: Right. Okay.
John Miley: And like you said, for cars, those are very, very cheap. So I guess they didn't really prioritize them in certain different ways and then sales shot down for cars during the pandemic, and then they just found themselves without these chips and huge backlogs now.
David Muhlbaum: Right. So the chip itself is not a feature of innovation. Making a lot of them at a good price, the fabrication is the issue.
John Miley: That's a big part of it. Although, I mean, I do want to point out that there is very interesting and exciting research in analog chips too, whether they're low-powered sensors or things that could be related to either electric cars or self-driving cars. That could be interesting, innovative features.
David Muhlbaum: Okay, John, we don't want to go through every single forecast because, of course, we would like people to subscribe to your wonderful product and read it online or on paper. But! At the end of the letter, outside the top 10 forecast, you have another one. And that is about the ongoing legalization of marijuana at a state level. What states do we see taking action — and what — in 2022?
John Miley: So we're pointing to four states as the best bets, Delaware, Maryland, Rhode Island, South Dakota, to legalize recreational pot use for adults this year.
David Muhlbaum: South Dakota? Wow.
Sandy Block: Make your vacation plans now folks.
David Muhlbaum: Yeah, I was not expecting that one, but you know-
Sandy Block: Yeah, it's an odd assortment.
David Muhlbaum: Well, the Northwest has had a sort of interesting record. You have Washington and Idaho, couldn't be more different and they share a border.
John Miley: I think one thing... I don't have the stats with me, but the amount of tax revenue some of the states can make.
That's what I was going to say. All of a sudden, people who are totally against legalizing pot start seeing some of the money coming in and that changes. So I think taxes definitely drive this conversation.
David Muhlbaum: Interesting.
John Miley: It's very surprising. If anyone wants to look, states can make a lot more money than you might think, if you haven't checked it out lately on revenue on marijuana sales.
David Muhlbaum: And if you want to know what your state or the neighboring state is actually charging, you can check out the Kiplinger tax map because that is one of the metrics in there. Freshly updated. Thank you so much, John. We look forward to the year, we look forward to your forecast, and we look forward to reading more of the Kiplinger Letter. Thanks for joining us.
John Miley: Happy New Year. Thanks for having me.
Sandy Block: Happy New Year.
David Muhlbaum: That will just about do it for this episode of Your Money's Worth. If you like what you heard, please sign up for more at Apple Podcasts or wherever you get your content. When you do, please give us a rating and a review. And if you've already subscribed, thanks. Please go back and add a rating or review, if you haven't already. To see the links we've mentioned in our show, along with other great Kiplinger content on the topics we've discussed, go to kiplinger.com/podcast. The episodes, transcripts, and links are all in there by date. And if you're still here because you want to give us a piece of your mind, you can stay connected with us on Twitter, Facebook, Instagram, or by emailing us directly at firstname.lastname@example.org. Thanks for listening.