The Fortune staff’s well-informed predictions about the people, products, and trends that will matter in 2017.The election of Donald Trump to the presidency represents a seismic shift in American politics, an event with implications nearly impossible to predict. One casualty of the election, indeed, may be the science of prediction itself: For all their algorithmic gymnastics, pollsters and betting markets were utterly confounded by Trump’s win. Which is why it’s essential to have a prediction tool that relies as much on art (and whimsy) as it does on science. And this year, for some extra insight, we’ve even teamed up with artificial-intelligence powerhouse IBM Watson, which mined tens of millions of sources to help us spot hidden trends. Here, we offer our well-informed, intuitive take on the stories that will shape business—and much else—in the coming year.
Here are some highlights from Fortune’s 2017 predictions:
The U.S. Gets a Giant New Infrastructure Bill
President-elect Trump will make this a high priority because it will give him a speedy bipartisan win. Members of both parties love spending money on roads, bridges, airports and other infrastructure. As a former Capitol Hill staffer memorably put it, “The smell of hot tar is an aphrodisiac to legislators.”
There Will Finally Be (Partial) Tax Reform
Congress will change the corporate tax code to encourage (or compel) companies to repatriate trillions in overseas cash at a low tax rate. The revenue generated by that deal will give Congress cover to pass some of the deficit-swelling income tax cuts that Trump and the GOP have backed.
2,073: Where the S&P 500 Will Finish in 2017
Yes, stock markets rose sharply after Trump’s win. But uncertainty about his impact on growth and trade will unnerve investors who are already anxious about interest rates and overvalued U.S. stocks. Expect the S&P 500 to finish 2017 about 3% below where it closed on Election Day.
U.S. GDP Growth Will Break 2%
International agencies are signaling an upbeat message for U.S. GDP growth in 2017, with the OECD, the IMF, and the Economist Intelligence Unit all forecasting 2.2% growth or more—up from a projected 1.6% in 2016. Some banks have taken a more dour tone about the forecast, but with wages rising and unemployment low, there’s reason for a little optimism.
Oil Will Cost $50 a Barrel Next Year
The Energy Information Administration says the price of oil will tick upward in 2017, to $50 a barrel from the current $45. Others expect a bigger jump—Merrill Lynch, for example, projects the price will hit $69 by summer. We think OPEC will opt to keep production high, and thus prices lower. But either way, gas will get a little more dear.
Homebuilders Will Rise From the Dead
Home prices have risen relentlessly of late—the S&P/Case-Shiller index is up 37% since 2012—but homebuilders have not kept pace with demand, as inventory for sale has fallen 9% over that time. With wages rising and unemployment low, 2017 will be the year builders finally start building in earnest again.
China Keeps Booming
Make no mistake, when President Xi Jinping last year called for GDP growth of at least 6.5% for the coming five years, China was signaling it would prop up growth in any way necessary. The domestic debt-to-GDP ratio rose by an astonishing 28% in the 12 months through June, according to Emerging Advisors Group. The result: Real estate prices are up, consumers are spending, and GDP growth is hitting targets (though actual growth will be at least a full percentage point below the government’s official releases).
Putin Picks New Targets
The Baltic states are fairly well defended, but Russia may see a target in the Balkans. Moscow will continue to bulk up its cyber offensive too. Bad news for establishment politicians throughout the West.
Alain Juppé Will Be France’s Next President
Veteran conservative Alain Juppé will be elected President of France in May, beating Nicolas Sarkozy to the center-right UMP party’s nomination and seeing off the Front National’s Marine Le Pen in the runoff. Bonus prediction: German Chancellor Angela Merkel wins reelection, despite rising fringe groups.
Brexit Will Start, and the Euro Will Pass the Pound
U.K. Prime Minister Theresa May will trigger Article 50, formally starting the thorny process known as Brexit and further fueling concerns about the economy (scaring off capital). Meanwhile, inflation will curb ECB quantitative easing, driving the euro higher.
To see all the 2017 predictions by Fortune, see their website at http://fortune.com/predictions-2017-future-business/.
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