E58: November's CPI, preparing for a downturn, macro outlook, Better.com's botched layoffs & more

At the time of the episode (11 Dec 2021), the latest published CPI data showed U.S. all‑items CPI‑U up 6.8% year‑over‑year in November 2021.(bls.gov) Sacks said this "looks like it's headed to 7%" on a year‑over‑year basis.

The next CPI release showed that for December 2021, the 12‑month percent change in the all‑items CPI‑U was 7.0%, i.e., exactly 7% year‑over‑year inflation.(bls.gov) This data was released on 12 Jan 2022, just one month after the podcast.

Since headline U.S. CPI YoY did in fact reach approximately 7% very soon after the prediction, the forecast was borne out by subsequent data.

The prediction timeframe is 5–6 years after late 2021, i.e., roughly 2026–2027. As of the evaluation date November 30, 2025, that window has not yet begun / is only just starting, so we cannot definitively judge whether a 1929-style severe economic or financial crisis caused by housing leverage and equity extraction will occur in that period.

While there have been notable economic events since 2021 (e.g., high inflation in 2022–2023, rapid interest-rate hikes, stress in parts of the banking system), none of these has been widely characterized by mainstream economic or financial historians as a 1929-level systemic collapse of the U.S. economy. However, since the prediction specifically targets outcomes around 2026–2027, and we are still before or at the very start of that horizon, the correct evaluation is that it is too early to tell.

Therefore, the status of the prediction is inconclusive at this time because the forecast period has not fully arrived.

Key parts of Sacks’s conditional prediction did not match what actually happened in 2022, even though the main political precondition mostly did.

1. Precondition: Manchin kills Build Back Better / no further large-scale stimulus.

   • On December 19, 2021, Sen. Joe Manchin publicly announced he could not support President Biden’s Build Back Better Act, effectively killing the bill in its then‑current $1.7–1.75 trillion form.(cnbc.com)
   • In 2022, Democrats and Manchin negotiated a much smaller, reworked package—what became the Inflation Reduction Act (IRA)—passed via reconciliation and signed on August 16, 2022. The IRA combined climate and health spending with tax increases and drug‑pricing reforms, and was scored as modestly reducing deficits (~$238–264 billion over 10 years), not as a huge net new stimulus.(en.wikipedia.org)
   • Separate analyses note that, even including other Biden‑era laws, the net effect by mid‑2022 was significant fiscal drag versus the earlier COVID‑era stimulus (e.g., Strategas and others cited 2022 as seeing the largest fiscal drag since 1947).(cnbc.com)
     Verdict on precondition: Largely satisfied in spirit: the original Build Back Better was killed, and there was no new multi‑trillion net stimulus, though some smaller, partially offset spending (IRA, etc.) still occurred.

2. Claim: A “massive relief rally” and risk assets take off in 2022.
   Sacks expected killing BBB and halting stimulus to trigger a big positive move in markets and risk assets in calendar 2022. Instead, 2022 was a broad bear market:

   • The S&P 500 total return for 2022 was −18.1%, its worst year since 2008.(spglobal.com)
   • The Nasdaq Composite fell about −33% in 2022.(statmuse.com)
   • The NYSE Composite was down about −11.5%.(en.wikipedia.org)
   • Bonds also suffered a historic drawdown as rates spiked; 2022 is widely cited as a sharp downturn year for the Bloomberg U.S. Aggregate Bond Index.(wsj.com)
     Across major equity and fixed‑income benchmarks, 2022 produced large negative returns, not the “massive relief rally” he predicted.

3. Claim: The economy would “take off like a rocket” with a soft landing in 2022.

   • BEA data show real U.S. GDP grew 2.1% in 2022 (annual average), down sharply from 5.9% in 2021.(bea.gov) Regional BEA data describe 2022 as a year of “much more moderate” growth of about 1.9% real GDP nationally.(apps-fd.bea.gov)
   • On a quarterly basis, real GDP fell at annualized rates in both Q1 (−1.6%) and Q2 (−0.9%) of 2022 before rebounding later in the year.(dallasfed.org) This produced a recession‑like pattern in early 2022, although the NBER did not declare an official recession.(en.wikipedia.org)
   • That pattern—two negative quarters followed by moderate growth—is inconsistent with “take off like a rocket,” though the economy did avoid a deep official recession in 2022.

4. Claim: The Fed wouldn’t need to raise rates aggressively in 2022 if stimulus stopped, enabling a soft landing instead of a whipsaw.

   • Inflation surged, with CPI inflation peaking around 9.1% year‑over‑year in June 2022.(spglobal.com)
   • In response, the Federal Reserve launched an exceptionally aggressive tightening cycle beginning March 2022. By December 2022 the Fed funds target range was raised to 4.25–4.50%, via seven hikes totaling 425 basis points in one year—its most aggressive pace since the early 1980s.(cnbc.com)
   • Those hikes contributed to the sharp repricing in both stocks and bonds noted above. This outcome is the opposite of his expectation that the Fed would not have to raise rates “as aggressively” if fiscal pumping stopped.

Overall assessment:
The main political antecedent (Manchin blocking the original Build Back Better and no further huge net fiscal stimulus) substantially occurred. But Sacks’s core outcomes—a massive relief rally, rocket‑like economic takeoff in 2022, and a non‑aggressive Fed tightening path leading to a gentle soft landing that year—did not materialize. 2022 instead featured a bear market in risk assets, only modest and uneven real growth, and one of the most aggressive Fed hiking campaigns in decades.

Therefore, the prediction is wrong.

Evidence from multiple data sources shows that after the late‑2021 selloff in public growth and SaaS stocks, private venture valuations did fall materially, especially from early 2022 onward, matching Sacks’ prediction.

• Carta’s Q1 2022 “State of Private Markets” report already showed late‑stage private valuations starting to roll over: median Series C valuations were down 18% quarter‑over‑quarter and Series E+ down 25%, with median round sizes falling across all late stages. This is exactly the kind of early trickle‑down from public comps into private pricing Sacks described as already beginning. (carta.com)
• By Q4 2022, Carta reports that median venture valuations were down at every stage, with very large drops at later stages that are most tightly linked to public-market comps: median Series B valuations fell 46% over 2022, Series C fell 55%, Series D fell 58%, and Series E+ fell 72% year‑over‑year. Round sizes also shrank dramatically, reflecting investors’ lower pricing for growth. (carta.com)
• Crunchbase’s analysis of the downturn notes that when public markets began their downward slide in December 2021, it took about one quarter for private markets to start scaling back valuations, and by Q2 2022 late‑stage funding and valuations had come down significantly—explicitly describing the lagged “trickle down” from public to private markets. (news.crunchbase.com)
• Subsequent Carta data through 2023–2024 characterizes this as a sustained “valuation reset” in venture, with elevated down‑round rates (~19–20% of all rounds) and large cumulative valuation declines at later stages since early 2022, confirming that the correction in public growth/SaaS names ultimately translated into structurally lower venture valuations. (carta.com)

Because private venture valuations did in fact decline materially in the period after the podcast (beginning in early 2022), in a way that’s widely attributed to the public‑market growth-stock correction, Sacks’ forecast that those public‑market moves would "absolutely" trickle down to venture valuations is right in both direction and timing (with the expected short lag).