The New Moon on January 22, 2023 marks the beginning of the Chinese Year of the Rabbit – or the Vietnamese Year of the Cat.

Why are different animals named for the same year in neighboring countries? We cannot say for certain, but there is a plausible explanation. When the animals of the Chinese zodiac were chosen, there were very few cats in China, so it is not surprising they were not included in the heavenly twelve. Sometime later, the concept of the twelve animal cycle was introduced in Vietnam, and there was an issue in the translation. The Chinese word for the zodiacal rabbit is “mǎo tu,” which sounds like the Vietnamese word for cat, which is “meo.” Both of those words sound like the “meow” hear from a cat. It would be an easy mistake to make, and one that is easy to live with.

As you probably know, the Oriental zodiac is comprised of a cycle of twelve years, each of which is represented by a different animal. The rabbit (as we will refer to the year) is the fourth of the cycle. This particular cycle has been a difficult one. It began with the Year of the Rat (2020), which brought the Covid pandemic and contentious presidential politics that ended with an assault on the United States Capitol. Those problems continued and intensified in the Year of the Ox (2021); and remained with us through the Year of the Tiger (2022), which also brought war and problems with inflation and an economic downturn.

The animals symbolize the connection of the Oriental zodiac to the Earth, but our world is also connected to the heavens. This fact is recognized by another cycle that moves through the five elements – earth, fire, wood, water and metal – which combines with the animal signs to make a longer cycle of 60 years.

In last year’s discussion of the Year of the Tiger, we said that beneath any appearance of calm there is a wild animal capable of lashing out at any moment. Indeed, only a very few weeks into the Tiger year, Vladimir Putin launched the Russian invasion into Ukraine that was the defining event of 2022, and which continues today.

Last year we also discussed the possibility of the stock market falling by up to 25%. During the year, the S & P 500 Index did drop by 25%, before rebounding slightly; and the NASDAQ performed even worse.

Can we expect any better with the Rabbit? On the surface, one would think so. The rabbit is seen as a peaceful and clever animal that brings a time of hope and prosperity. The current cycle, though, should keep us wary.

This essay is not a psychic or astrological prediction. Rather, it is a look at the cycles represented by the Chinese calendar to try to extrapolate what to expect in the future from events that have happened in the past. It seems that the year may once again focus on the Ukraine war and the American economy, so primary consideration will be given to how those fit into past cycles, with brief considerations of other events.

We are just leaving the year of the ultimate predator – the Tiger, and moving on to the ultimate prey – the Rabbit. This could be the year of the rabbit as victim. A problem with rabbits is that they tend to procrastinate (remember the story of the tortoise and the hare where the hare lay down for a nap rather than finish the race), and that makes it difficult to change the momentum that has already begun.

Gun Violence

It is unfortunate, but in the United States when we talk about victims we are too often talking about gun violence. The last year of the Water Rabbit was 1963, the year that John F. Kennedy was shot and killed, and his accused slayer, Lee Harvey Oswald, was himself gunned down in the Dallas police station. 1987 was a Rabbit year in which a gunman entered the cockpit of a Pacific Southwest Airlines plane, shot the pilot, the copilot and three others before crashing the plane and killing everyone on board. It was also a Rabbit year on April 20, 1999, when the Columbine High School massacre occurred in Colorado. During the last Rabbit year, 2011, the news told us of mass murders in Copley Township, Ohio; Carson City, Nevada; Seal Beach, California; Irwindale, California; and other locations.

There will probably be too much timidity during the coming Rabbit year to change this culture of gun violence. Therefore, we must be wary and expect more mass shootings, and more victims, in the coming months.

Natural Disasters

Since this is the year of the Water Rabbit, we may see several water-based natural disasters. During the 1963 Year of the Water Rabbit, the winter brought heavy snow, freezing temperatures and blizzard conditions not only in the United States but also in many parts of Europe. Later, on December 31^st of that year there was a major blizzard extending as far south as Alabama. In October, Hurricane Flora wreaked destruction and caused some 7,000 deaths in Cuba and on Hispaniola.

The wind has been a problem in other Rabbit years. During 2011, for example, which was the most recent Rabbit year, the United States suffered more than 1,700 tornadoes. That is the second most on record.

Many earthquakes happen each day, and in any given year one or more could be very destructive. Rabbit years have had more than their share.  Let’s take a quick look at the Rabbit years since the middle of the 20^th Century:

1951: More than 1,100 people killed after an earthquake off the coast of Ecuador;

1963: More than 1,000 killed and 80% of Skopje, Yugoslavia destroyed by earthquake;

1975: Nearly 2,500 killed and the town of Lice, Turkey almost completely destroyed;

1987: Over 1,000 killed and thousands more missing after another earthquake in Ecuador;

1999: More than 17,000 killed, with another 50,000 casualties, in another earthquake in Turkey;

2011: Nearly 20,00 killed, many thousands more missing or injured, and extensive damage caused by earthquake and tsunami in Japan, including the failure of the cooling system at the Fukushima Daichi Nuclear Power Plant and the release of large amounts of radiation.

It would not be surprising to see some major earthquakes this year, particularly in Ecuador or Turkey.

The dangers from any of the potential natural disasters may be increased by the effects of man-made climate change.  We humans will probably not have the resolve to address that problem this year.

U.S. Economy

Throughout the Year of the Tiger, and as we move into the Year of the Rabbit, the big economic story has been, and is, the issue of what will happen to the economy as the Federal Reserve Board attempts to manipulate it. The Fed previously manipulated bond prices and decreased interest rates, causing a rise in inflation. The Fed is now trying to reverse that inflation by raising interest rates – a strategy that many fear will create an economic recession.

In looking here at past Rabbit years, we will only go back as far as 1939, which was the first Rabbit year after the Great Depression, since the government’s involvement in the macroeconomy changed greatly during the Depression years.

Let us start with expectations for inflation. As we begin the year, inflation, as measured by the Consumer Price Index, is around 7%, the most recent official figures being from last November. During Rabbit years, the average rate of inflation has been slightly above 3%. The range has been from no inflation at all in 1939 to 6.9% in 1975. Those figures appear to indicate that inflation should be lower in the coming year. There is a caveat, though. While inflation was tamer in each of those years than it is today, the rate of inflation did rise in 5 of the past 7 Rabbit years. In only two of those years, 1951 and 1975, was the previous year’s inflation above 6%, as it is today, and those are the two years that the rate declined. So, again, the indication is that the rate of inflation will cool, and probably revert to nearer the mean of 3%.  [Edit:  After this was posted, the December 2022 CPI figure was released, showing an inflation rate of 6.5%.]

Inflation has been worse in most of the rest of the world than in the United States, and it will probably take longer to see a meaningful drop in those countries.

We will now consider whether a recession should be expected this year. Although the technical definition of a recession is a bit complicated, it generally includes a negative or very low positive change in the gross domestic product (“GDP”) and increasing unemployment, so we will examine those numbers.

First, it should be pointed out that 2 of the last 7 rabbit years included the end of an established recession. The country had begun to emerge from the Great Depression in about 1934, but the recovery was interrupted by a recession that began in 1937 and ended in the Rabbit year of 1939. There was also a recession that began in 1973 and came to an end in the Rabbit year of 1975. So, there has not been a recession beginning in a Rabbit year – only ending then. The other five Rabbit years have shown positive GDP growth.

It is also interesting to note that earlier in American history there were recessions that ended in the Rabbit years 1843, 1867, 1879, and 1891. Again, we see that recessions tend to end, not begin during Years of the Rabbit.

The average GDP Growth in Rabbit years has been 4.3%, with a range of 8% in 1939 and 1951 down to a slight negative growth in 1975. During the last Year of the Water Rabbit, 1963, the GDP grew at only a rate of 1.6%. In the coming year, it looks as if the GDP should grow, but the perhaps not as much as normal.

The most recent figures for American unemployment show a rate of only 3.5% as the Year of the Tiger draws to a close. The average rate for recent Rabbit years has been 7%, but that is skewed by the fact that 1939 showed a 17.2% rate. If that year is not considered, the average rate has been only 5.8%, with a range from 3.1% in 1951 to 8.5% in 2011. The unemployment rate has fallen in each Rabbit year except 1975. These statistics suggest that there should be only a modest increase in unemployment, if any at all, during the coming year.

So, it does not seem that the country will experience a recession in 2023.

We will now take a brief look at what might be expected for precious metals in 2023 by looking at gold prices. There have only been three Rabbit years since the U.S. went off the gold standard and allowed the price of the metal to float in 1971. In 1975, we had the Year of the Wood Rabbit, and the price of gold fell consistently throughout the year. The Year of the Earth Rabbit came in 1999, and brought the price of gold to a 20 year low. Then, 2011 was the year of the Metal Rabbit, and gold prices rose to record highs, as might be expected. Based on the regenerating cycle in Chinese astrology, water is said to run off of metal, indicating that this is not a good year to invest in precious metals.  However, considering the 2011 price rise, if gold’s price begins to increase, it could go up significantly.

Finally, let us look at the stock market. The past 7 Rabbit Years have shown gains 5 times, with an average gain of over 13%. A similar gain this year would bring the market back close to its all-time high, with the Dow Jones Industrial Average near 37,000. During Rabbit years, the market has generally risen in the first two quarters, pulled back in the third quarter, and gained a little in the fourth quarter.

The market was down a bit in 1939, but only about 3%, though that decline marked the beginning of a bear market lasting more than 2 years. In 1987, the market dropped more than 8%, with most of the loss coming on one day. “Black Monday,” October 19, 1987, saw stocks lose nearly a quarter of their value within a few hours.

This Year of the Rabbit should be a good one for stocks, but be wary of a possible crash.

Ukraine War

The most significant geopolitical event of the Year of the Tiger was the Russian invasion of Ukraine. It touched off a war that continues nearly a year later and has had major adverse effects on the world’s food and energy supplies. Let us consider the direction that war may take in the Year of the Rabbit.

Doing so is not easy, however. Although Ukraine’s capital, Kyiv, has been settled for more than 1,500 years, the country we now call Ukraine has only existed since 1991. Before that, parts of the modern Ukraine were, at various times, controlled by Russia, Poland, the Ottoman Empire, the Kievan Rus, and was a Soviet Socialist Republic as part of the U.S.S.R. The modern Ukraine has only seen the Year of the Rabbit twice, and it was not at war in either of those years.

Russia, on the other hand has long been an independent country, so we will look at some of its history in Rabbit years. Also, since the current invasion is referred to as “Putin’s War,” it is instructive to consider what has happened to Russian leaders during Rabbit years.

A good place to begin is with the Crimean War. In the mid-19th Century, Palestine (including the Holy Land), the Levant, and much of Eastern Europe were parts of the Ottoman Empire and the Persian Empire. Russia did not want those empires on its southern borders and had fought a successful war against each in the 1820s. The countries of Western Europe thought the aging, weakening empires were not a threat, and they benefited because the Ottoman countries were a buffer against any Russian expansionism.

For many years there had been complaints that Muslim Ottomans had mistreated Christians in the Holy Land, and France declared itself the protector of those Christians. Russia responded by declaring itself the official protector of Orthodox Christians. The mistreatment continued, though, and in late 1853, Russia, acting as protector, invaded Ottoman lands in what is now Romania.

The Western European powers, particularly France and Britain, objected to the territorial grab by the Russians. In 1854 (which was a Year of the Tiger), several European countries sent forces to the Black Sea and the Crimean peninsula to stop the Russian advance. In the ensuing Year of the Rabbit (1855), the Russians suffered a string of defeats and finally accepted peace terms they were offered during the week before the end of the Rabbit year.

The Crimean War was not the only defeat suffered by the Russians in a Rabbit year. In 1807, during the Napoleonic Wars, as the French were invading Russia, they met and soundly defeated the Russian army in the Battle of Friedland. That defeat was so substantial that the Russians immediately sought an armistice that was memorialized as the Treaties of Tilsit.

There is an interesting sidebar here. To celebrate his victory, Napoleon gathered a number of dignitaries for a rabbit hunt. One of his closest advisers gathered and caged a large number of rabbits. When the hunt was to begin, the rabbits were released. Rather than running away, the rabbits ran straight for Napoleon and began climbing up his legs and onto his jacket, as others tried to brush or whip the animals away. He had to retreat to his carriage, and some of the rabbits even followed him there.

1963 was the last Year of the Water Rabbit, and that was the year of the Cuban Missile Crisis. Russia had begun establishing missile sites in Cuba, which provoked a strong response from the United States.  Russia backed down and agreed to remove all its missiles in exchange for an American promise not to invade Cuba.

Now, Russia has had other defeats during Rabbit years; and, to be fair it has had some military successes, as well as years of internal turmoil.  We can see some of these as we look at some prominent Russian leaders.

Let’s begin with Empress Catherine the Great, whose reign from 1762 to 1796 included three Rabbit years. The first of those was 1771, a year in which Russia suffered an outbreak of plague and riots to protest the government’s response to the epidemic. The focus of the next two Rabbit years, 1783 and 1795, was the region of Kartli-Kakheti in what is now Georgia, and which had been under Persian control for centuries until it achieved independence in 1762. As a small, weak, independent nation, it feared future confrontations with Persia. In 1783, Russia agreed to be its protector. Then, in 1795, Persia did invade the region, crushed the opposition, and completely destroyed the capital city of Tblisi. Russia, the protector, did nothing to help. Russia did not fare too well in the Rabbit years of Catherine’s reign.

Another monarch who reigned through three rabbit years was Nicholas I, who was emperor from 1825 to 1855. In 1829, Nicholas had himself crowned King of Poland, but was deposed by a Polish uprising in 1830. Then, in the Rabbit year 1831, Nicholas sent Russian troops into Poland, crushing the uprising and reducing Poland to a Russian province. The next Rabbit year, 1843, was another year of internal turmoil as a famine began that lasted for two more years. The Rabbit year 1855 has already been discussed. It was the year that the Russians were defeated in the Crimean War. Nicholas, himself died during that year shortly before the official end of the war. So, Nicholas had one positive Rabbit year and two that were negative.

The longest ruling Russian leader in the 20^th Century was Joseph Stalin. He became the leader in 1924, following Lenin’s death, and remained in power until his own death in 1953. Three Rabbit years occurred during that period. The first was 1927, another year of internal turmoil. As Stalin worked (with his secret service) to consolidate his power, members of the opposition such as Leon Trotsky were expelled from the Communist Party and many were exiled. Then, in 1939, Russia’s military acted during the Year of the Rabbit. As World War II began, and buoyed by his nonaggression pact with Nazi Germany, Stalin successfully invaded Poland and Finland. During his final Rabbit year, 1951, Stalin was quite ill and remained at his vacation dacha for about half the year. Again, it was one positive and two negative Rabbit years for Russia.

The current Russian leader, Vladimir Putin, is entering his third Rabbit year as Russian leader. In the first such year, 1999, Putin was a rising star, but was not well known to the general population. In August of that year, he was appointed one of three deputy prime ministers in Boris Yeltsin’s government. Then, on the same day, he was appointed acting prime minister, and Yeltsin announced that we wanted Putin to be his successor. In December, Yeltsin unexpectedly resigned and Putin, as prime minister, became the acting president. He was officially elected the following year. The Rabbit year 2011 began with Putin again acting as Russia’s prime minister. He had served two four-year terms as president and was prevented by the constitution from seeking a third consecutive term after 2008. His position as prime minister allowed him to maintain control of the government, however. In 2011, Putin agreed to run for a third term, and his party was the big winner in legislative elections that were marred by allegations of fraud. Putin became president again in 2012 and remains in that position today (having amended the constitution to permit his to serve up to four consecutive terms).

On balance, Russia has not fared well in Years of the Rabbit. Its invasion of Ukraine will most likely end in failure. Vladimir Putin has had positive experiences in the past two Rabbit years, but the future does not look so bright. Looking back to the health problems of Nicholas I and Joseph Stalin, it seems that there may be some truth to the rumors that he is now gravely ill.

Still, the world must be wary. Even a defeated Russia could cause problems with grain exports, energy exports, cyber warfare, and in other ways.

Good Things

This essay has emphasized things like tragedies and wars because those are the macro-events that are remembered in history. Most days, though, there is no hurricane or tornado, and most people do not live in a war zone. Life is pretty normal on most days, and that is a good thing. Even on a scale larger than the individual person, many good things do occur in Years of the Rabbit. To mention just a few:

Beatrix Potter spent the summer of the Water Rabbit year 1903 writing the delightful The Tale of Benjamin Bunny;

In 1939, we first saw Bugs Bunny as the gray and white rabbit we know today (he had appeared as a white rabbit in a 1938 cartoon);

In 1951, we went down the rabbit hole with Alice as Disney’s Alice in Wonderland was released, as was John Houston’s great movie, The African Queen; and the 22^nd Amendment to the U.S. Constitution was ratified, limiting the president to two terms;

1963 gave us Martin Luther King’s “I Have a Dream” speech and the beginning of Beatlemania, and the Sabin oral polio vaccine was given to children all across the United States and Great Britain;

In 1975, the Vietnam War finally came to an end, and the first personal computers, digital cameras and laser printers were introduced;

In 1987, Ronald Reagan made his famous speech asking Mr. Gorbachev to “tear down this wall,” and the first “Simpsons” cartoon was shown;

1999 brought us the new Millennium, the premiere of “SpongeBob SquarePants” and the first woman elected as prime minister in New Zealand (note: the Denver Broncos won the Super Bowl in 1999, but that game was played two weeks before the Year of the Rabbit began);

The first successful synthetic organ transplant occurred in 2011, and that was the year J. K. Rowling became the first person to become a billionaire by writing books.

Of course, many more good things happened in those years, and many will happen in the coming year. Enjoy, but be wary.

Gong xi fa cai. Gong hey fat choy. Happy New Year.