Predictions for 2023

Scott posts his predictions for 2023: FIVE MORE YEARS

Those yearly “predictions for next year” posts are starting to reach the limit of their usefulness. Not much changes from year to year, and most of what does change is hard to capture in objective probabilistic predictions.

Agree…with the exception of election cycles, not much changes on a year over year basis. May as well just consolidate five prediction posts into one.

One may assume that predicting so far into the future is hard, but it’s actually pretty easy. All one needs to do is extrapolate preexisting trends, but possibly with some adjustments.

Here they are:

1. Trump narrowly wins reelection. One-term presidents are rare, the only two recent examples being Herbert Walker Bush and Jimmy Carter. One would have to go as far back as Herbert Hoover’s loss in 1932 to find a third example (I’m excluding Ford because he was effectively just finishing Nixon’s second term, and does not technicality count as an incumbent). In all three examples, the incumbent lost due to economic recession and or high inflation, which brings me to my second prediction:

2. No recession, making the post-2009 expansion by far the longest ever at 14 years, even beating the 90′s expansion by almost six years.

3. The stock market will keep going up, making the post-2009 bull market the longest ever, too, besting the 90′s bull market by six years. Assuming a conservative estimate of 10% compounded annual returns, the S&P 500 will hit 4350.

4. Facebook, Amazon, Google, and other FANG stocks will continue to post huge returns (30% annual compounded returns), and I remain ‘long’ those stocks. Jeff Bezos will be worth $200-300 billion. Amazon continues to take over retail and other aspects of commerce. Google continues to dominate advertising. Facebook, combined with Instagram, dominates social networking and mobile advertising.

Because of 2 and 3, Trump will win reelection despite not building a wall or doing much about immigration.

5. Bitcoin is above 1,000 but below 12,000 (Bitcoin is exceedingly volatile, so understandably it’s hard to pinpoint this).

6. No wall (unless it’s something resembling a palisade that is several hundred meters and only covers a tiny amount of the border, which is not what voters had in mind in 2016-2017).

7. No mass deportations. Dreamers stay. No meaningful progress made on immigration. Despite lack of progress, the ‘right’ sticks with Trump anyway.

8. Despite the substantial expansion of the national debt, inflation does not budge much, perplexing some economists, but not me.

9. GDP continues to grow steady at 3% a year. Unemployment hovers around 5%.

10. Four more mass shootings (about 1/year).

11. 2020 Democratic nominee? I have no idea. My economic and other forecast models do not work on this. It won’t be Zuck though. Although the big-money donors, similar to Hillary, want him to win, he has an even worse likability issue than Hillary, and also he’s too young.

12. Wealth inequality keeps widening.

13. Home prices in Bay Area, Silicon Valley continue to surge. No housing market contraction.

14. Rent, healthcare, insurance, tuition, etc. continues to exceeds inflation.

15. No bursting of ‘college bubble’. The college wage premium continues to rise.

16. Self-driving cars and space tourism remains in the prototype stage.

17. No major geopolitical conflicts. No conflicts pertaining to Russia or North Korea.

18. Interest rates rise very gradually despite the tax cuts and rising national debt.

19. Trump is not indicted or impeached, no smoking gun pertaining to Trump-Russia ties

20. Tesla defies expectations and doomsayers despite its spending.