How good is your intuition?
We’ll know in 12 months or so, when we assess the accuracy of predictions that more than 6,000 Yahoo Finance readers made for 2023. We asked for those forecasts in an online survey we ran on Dec. 22 and 23.
For now, however, our respondents provided some intriguing ideas about who will make and lose money in 2023, and what might be different by the end of next year. Overall, the Yahoo Finance audience is fairly optimistic. The median forecast for the S&P 500 (^GSPC) stock index is 4,000 by the end of next year, which would be a 5% gain from current levels (and not another wipeout like 2022 brought). The median forecast for the Nasdaq (^IXIC) index is 11,000, which would be a 6.2% gain. The median outlook for inflation 12 months from now is 4.3%, which would be nearly three points lower than the current level, and welcome news at the Federal Reserve.
Nearly 70% of respondents think there will be a recession in 2023, with just 17% saying there won’t be. But in an open-ended question asking about possible surprises in 2023, many poll-takers said they expected a mild and short downturn.
We got 3,774 answers to the question about business or economic surprises, which had no prompts and let respondents write whatever they wanted to. So we can’t quantify those responses. But content analysis reveals several recurring themes, and the word cloud below gives some idea of what’s most on investors’ minds as the new year begins. Here are 11 things Yahoo Finance readers predict for 2023:
A happy ending. Many investors using Yahoo Finance think that by the second half of 2023, a mild recession will be nearly over, inflation will be under control and the stock market will be rebounding. Sample reader prediction: “Market rebound in the second half of next year and surpassing previous highs.”
Related prediction: The unemployment rate rises from 3.7% now to around 5%.
The war in Ukraine ends. The word “war” appeared 256 times amid the 3,774 responses, more than any other significant word. Russia is giving no hints that it plans to give up on its quest to annex parts of its neighbor to the west, but Ukraine clearly has momentum and Russian forces seem exhausted, suggesting a Russian withdrawal might be possible within the next 12 months. Sample prediction: “Russian withdrawal from Ukraine at the end of the year causes the market to surge.”
Related: Russia uses a nuclear weapon; NATO and the United States get drawn directly into the war; Russian President Vladimir Putin falls; Russia collapses.
Gasoline prices surge again as China reopens. This is very plausible, given that the huge COVID-related slowdown in China this year reduced Chinese demand for energy and helped bring global prices down. China is now lifting strict COVID restrictions and trying to get back to normal. Sample prediction: “Gas prices will move back towards $4 after China fully reopens.”
Related: China finds it can’t fully reopen and remains in a kind of economic limbo.
Kamala Harris assumes the presidency. Some respondents think President Biden will die in office or suffer a serious illness forcing him to resign. We didn’t detect unusual ill will toward Biden in these responses, but they do seem to reflect concerns that the 80-year-old president is too old for one of the world’s most demanding jobs. Sample prediction: “Biden health crisis.”
Related: Neither Biden nor Trump mount competitive 2024 presidential campaigns
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Used car prices plunge. This is also plausible, given that the surge in prices in the first half of 2022 could easily reverse in the first half of 2023, especially with rapidly rising rates on auto loans. The Manheim used-car value index is already 14% below its peak from January 2022 and could fall another 20% to get back to normal levels. Sample prediction: “Used-car market collapse.”
Related: There’s also a glut of new vehicles by year end.
The electric-vehicle revolution pauses. Tesla’s (TSLA) stock price is down 73% from its 2021 peak. EV startups such as Lucid (LCID) and Rivian (RIVN) are struggling. Some Yahoo Finance users think these are signs that buyers are starting to think twice about the higher cost, limited range and recharging complexities of EVs. Sample prediction: “Electric cars will not be the future as everyone thinks.”
Related: Apple (AAPL) finally introduces the iCar, its first entry into the automotive market.
Big Tech makes a comeback. The Nasdaq tech-stock index, down 30%, has fared worse than the broader market in 2022. Some think tech giants such as Apple and Microsoft (MSFT) will no longer be the market’s top dogs. But others think Big Tech will come roaring back once inflation and interest rates stabilize. Sample prediction: “Tech stocks will soar.”
Related: Beaten-down Chinese tech stocks will outperform their U.S. rivals.
The metaverse finally catches on. Meta (META) CEO Mark Zuckerberg staked his company’s future on the widespread adoption of the metaverse, where virtual reality somehow enhances the traditional experience of the internet. It didn’t happen in 2022, and Meta’s stock endured a 65% wipeout. But Meta is still standing and maybe Zuck was just a year or two early. Sample prediction: “Collapse of social media and the rise of its replacement, the metaverse.”
Related: Resurgence of Meta’s stock price; Zuckerberg steps down as CEO
Other big winners: Green energy, 3-D printed houses, shipping. Whether it solves the problem of global warming or not, green energy is likely to generate sizable returns because of the huge federal investments included in the 2022 Inflation Reduction Act. The new trend of 3-D printed homes seem like a looming solution to the nation’s housing shortage. Shipping will surge as consumer demand for goods begins to grow again in the second half of 2023. Sample prediction: “Shipping will surprise all forecasters.”
Related: Battery metals such as lithium, cobalt, and nickel could rise further if EV demand keeps growing.
Biden’s student-debt relief plan dies. This actually seems more likely than not, since the Supreme Court will decide if Biden can forgive billions in student debt by executive order sometime during the first half of 2023. Many analysts think the court’s conservative majority has the legal basis and political temerity to nullify Biden’s order, dashing the hopes of some 40 million borrowers. Sample prediction: “Student debt relief will be ruled unconstitutional by Supreme Court, causing an immediate financial crisis. Borrowers will have to borrow more, sell assets, or greatly reduce budget.”
Related: A personal-debt crisis if interest rates get too high
Donald Trump will form a new political party. He’s losing favor with Republicans, given that many of the candidates he backed in the 2022 midterm elections lost. And Florida Gov. Ron DeSantis seems poised to push Trump aside in the 2024 Republican presidential primaries. Sample prediction: “Trump will leave the Republican Party.”
Related: Trump will go to jail.
Rick Newman is a senior columnist for Yahoo Finance. Follow him on Twitter at @rickjnewman
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