How good is your intuition? Finance Predictions for 2023
We’ll know in 12 months or so when we assess the accuracy of predictions that more than 6,000 Finance readers made for 2023. We asked for those forecasts in an online survey we ran on Dec. 22 and 23.
For the time being, our respondents offered some fascinating predictions about who would earn and lose money in 2023, as well as what may be changed by the end of next year. Overall, the Finance audience is optimistic. The median forecast for the S&P 500 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 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 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 Finance readers predict for 2023:
A happy ending: Many investors using 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 rebound. “Market will return in the second part of next year and reach past highs,” predicts one reader.
The war in Ukraine ends: Among the 3,774 replies, the word “war” occurred 256 times, more than any other major term. Russia denies that it plans to give up on its quest to annex parts of its neighbor to the west. Still, Ukraine has momentum, and Russian forces seem exhausted, suggesting a 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.”
Gasoline prices surge again as China reopens: This is very plausible, given that the huge COVID-related slowdown in China this year reduced Chinese energy demand and helped bring global prices down. China is currently easing COVID limitations and attempting to return to normalcy. Sample prediction: “Gas prices will return to $4 after China reopens.”
Kamala Harris is inaugurated as President: Some respondents believe President Biden will die in office or get sick, prompting him to leave. We didn’t detect unusual ill will toward Biden in these responses, but they 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.”
Used car prices plunge: This is also plausible, given that the price surge 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 has already fallen by 14% from its high in January 2022 and may yet decline by another 20% to return to average levels. Sample prediction: “Used-car market collapse.”
The electric-vehicle revolution pauses: Tesla’s stock price is down 73% from its 2021 peak. EV startups like Lucid and Rivian need help. Some users of Finance believe these are indications that purchasers are beginning to consider the greater price, shorter range, and more challenging recharging requirements of EVs. Sample prediction: “Electric cars will not be the future as everyone thinks.”
Big Tech makes a return: The Nasdaq technology stock index has performed worse in 2022 than the overall market, down 30%. Some think tech giants like Apple and Microsoft will no longer be the market’s top dogs. But others think Big Tech will return once inflation and interest rates stabilize. Sample prediction: “Tech stocks will soar.”
The metaverse finally catches on: 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.
Other big winners: Green energy, 3-D printed houses, and 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 in the 2022 Inflation Reduction Act. The new trend of 3-D printed homes is a looming solution to the nation’s housing shortage. Shipping will surge as consumer demand for goods grows again in the second half of 2023. Sample prediction: “Shipping will surprise all forecasters.”
Biden’s student-debt relief plan dies: This 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. According to many observers, the conservative majority on the court has the legal authority and political audacity to overturn Biden’s decision, destroy the aspirations of some 40 million borrowers, and do so. 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 the budget.”
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 prepared to replace Trump in the Republican presidential primary elections of 2024,. Sample prediction: “Trump will leave the Republican Party.”
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