Forecast for the Year Ahead
I don’t typically do predictions. But many events coming in the year ahead are forecastable in a range of certainty. A big driver are positions espoused by an incoming US President. Let’s look at how the world economy, political shifts, and emerging technologies will impact nations, regions, alliances, and the status quo.
Most reliable forecast: Change. Expect change everywhere. Probability: over 90%.
Big Picture: electorates in a massive wave expressed dissatisfaction with their governments and threw out liberals and installed conservatives in a huge shift of sentiment. Citizens in the majority are dissatisfied with their economic status, government spending, and unpopular leaders.
Economy: US soft-lands its economy in Q1 (75%) but all bets are off from their. Major disruptors: Tariffs. Taxes. Immigration. Tariffs could result in nearly 2 points off GDP performance and 1.4 million fewer jobs. Plus raise prices for the average household by $3000 in the year.
War: a cease-fire in Ukraine is highly likely. Probability: 75%. That doesn’t mean a permanent solution to the invasion and territorial carve-up of the country but there is desire on both sides plus outside influences to guarantee an uneasy truce. Russia is out of troop sources and is throwing unsupported North Koreans at the front lines. Ukraine will likely lose American support. Both nations need economic relief.
Immigration: the knives are already sharpened and the debates are beginning. If the Trump Admin goes for immediate action like sealing off even legal immigration it will spike costs. The labor market will tighten. It will hit some sectors heavily. Construction, hospitality, and agriculture. Farmers will have crops rotting in fields if deportations are begun. Workers will fear taking jobs in harvests where they will be high profile targets for detention and deportation along with their families.
My own AI-aided inflation forecasts assume Trump will not get in front of inflation. The tariffs will have inflationary effects. Immigration barriers and deportations will tighten the labor market and raise wages. More inflation. That’s if, a big if, the tariffs and deportations happen. For the voters who turned away from the Democrats to get a better life for their families, disappointment.
Regulatory Rollback: Inevitable. 100% likely. But the scale is up in the air. Biggest areas: Cybercurrency gets a big ease-up enabling acceleration and higher risk (see below.) EPA is where some of the biggest regulatory rollback will occur. Good for farmers, manufacturing, energy. Banking could also benefit from a revamp of the CFPB and there’s talk of even more tinkering with the Fed, FDIC, and NCUA – in other words the regulator/insurer roles.
When the FTX collapse came and SBF got sentenced it looked like Crypto was dead. Then the crypto-bros weighed in and the Trump family changed tune from “scam” to “scoop it up.” This has legs. The administration will be friendly and it would take a bubble and collapse to reverse the momentum.
Looking over the various trend forecasts for food one stands out. You might have missed that 7-Eleven became Japanese-owned in 2005. Curiously for Americans, convenience stores are a source of good eats in Japan. It’s a tradition. Next year it comes to America. Along with Big Gulps look for well-prepared foods like great sandwiches, elevated ramen, and rapidly-developed specialties for the US market like variations on onigiri rice balls. Look for WaWa and other competitors to respond.
Wild-cards (less-probable but high-impact situations).
Bird flu makes the jump to humans. Already happened. But look for a developing catastrophe. But there are two major drivers and a mitigating factor: mutations and vectors for drivers. A health secretary who’s an avowed enemy of vaccines is the factor. The latest virus has already mutated in recent cases as of this writing. There’s also strong evidence that the virus is present in the wild bird population, creating a vector that rivals global air travel by humans. Watch this one. As usual, the world and the US are not prepared. Likelihood 25%.
Even more likely is bird flu decimates domesticated flocks in North America. Likelihood 80%. An inept government solution in the US will lead to strong barriers by Canadians to protect their bird populations and egg supplies. The only solutions are developed immunity or vaccines. Those are problematic in animal agriculture.
Counter-Trends: look for reaction to dictates from an incoming administration. Not emphasizing politics, but social trends. Likelihood: 100% but scale? Who knows. If RFK is confirmed as Health Secretary look for a war on food that’s bad for you. Reaction? Defiance in younger demographics to Make America Healthy Again. Fast food restaurants overwhelmed. Diet Coke climbs in popularity. Grease is Good! Of course it has to run against the obese of America adopting even more GLP-1 and reducing their consumption
Most reliable forecast: Change. Expect change everywhere. Probability: over 90%.
Big Picture: electorates in a massive wave expressed dissatisfaction with their governments and threw out liberals and installed conservatives in a huge shift of sentiment. Citizens in the majority are dissatisfied with their economic status, government spending, and unpopular leaders.
Economy: US soft-lands its economy in Q1 (75%) but all bets are off from their. Major disruptors: Tariffs. Taxes. Immigration. Tariffs could result in nearly 2 points off GDP performance and 1.4 million fewer jobs. Plus raise prices for the average household by $3000 in the year.
War: a cease-fire in Ukraine is highly likely. Probability: 75%. That doesn’t mean a permanent solution to the invasion and territorial carve-up of the country but there is desire on both sides plus outside influences to guarantee an uneasy truce. Russia is out of troop sources and is throwing unsupported North Koreans at the front lines. Ukraine will likely lose American support. Both nations need economic relief.
Immigration: the knives are already sharpened and the debates are beginning. If the Trump Admin goes for immediate action like sealing off even legal immigration it will spike costs. The labor market will tighten. It will hit some sectors heavily. Construction, hospitality, and agriculture. Farmers will have crops rotting in fields if deportations are begun. Workers will fear taking jobs in harvests where they will be high profile targets for detention and deportation along with their families.
My own AI-aided inflation forecasts assume Trump will not get in front of inflation. The tariffs will have inflationary effects. Immigration barriers and deportations will tighten the labor market and raise wages. More inflation. That’s if, a big if, the tariffs and deportations happen. For the voters who turned away from the Democrats to get a better life for their families, disappointment.
Regulatory Rollback: Inevitable. 100% likely. But the scale is up in the air. Biggest areas: Cybercurrency gets a big ease-up enabling acceleration and higher risk (see below.) EPA is where some of the biggest regulatory rollback will occur. Good for farmers, manufacturing, energy. Banking could also benefit from a revamp of the CFPB and there’s talk of even more tinkering with the Fed, FDIC, and NCUA – in other words the regulator/insurer roles.
When the FTX collapse came and SBF got sentenced it looked like Crypto was dead. Then the crypto-bros weighed in and the Trump family changed tune from “scam” to “scoop it up.” This has legs. The administration will be friendly and it would take a bubble and collapse to reverse the momentum.
Looking over the various trend forecasts for food one stands out. You might have missed that 7-Eleven became Japanese-owned in 2005. Curiously for Americans, convenience stores are a source of good eats in Japan. It’s a tradition. Next year it comes to America. Along with Big Gulps look for well-prepared foods like great sandwiches, elevated ramen, and rapidly-developed specialties for the US market like variations on onigiri rice balls. Look for WaWa and other competitors to respond.
Wild-cards (less-probable but high-impact situations).
Bird flu makes the jump to humans. Already happened. But look for a developing catastrophe. But there are two major drivers and a mitigating factor: mutations and vectors for drivers. A health secretary who’s an avowed enemy of vaccines is the factor. The latest virus has already mutated in recent cases as of this writing. There’s also strong evidence that the virus is present in the wild bird population, creating a vector that rivals global air travel by humans. Watch this one. As usual, the world and the US are not prepared. Likelihood 25%.
Even more likely is bird flu decimates domesticated flocks in North America. Likelihood 80%. An inept government solution in the US will lead to strong barriers by Canadians to protect their bird populations and egg supplies. The only solutions are developed immunity or vaccines. Those are problematic in animal agriculture.
Counter-Trends: look for reaction to dictates from an incoming administration. Not emphasizing politics, but social trends. Likelihood: 100% but scale? Who knows. If RFK is confirmed as Health Secretary look for a war on food that’s bad for you. Reaction? Defiance in younger demographics to Make America Healthy Again. Fast food restaurants overwhelmed. Diet Coke climbs in popularity. Grease is Good! Of course it has to run against the obese of America adopting even more GLP-1 and reducing their consumption