Who has predictions for 2016 to share? I’ll go first…
Software: the iPhone will continue moving in the direction of Android and Windows. More capability, but also more crashes and unpredictable behavior such as slow response time.
Hardware: the beginning of the end of Intel’s dominance? As the desktop continues to die and the newest chips aren’t that much faster than the old chips (just more cores), why should anyone know or care what the CPU is inside a tablet or notebook computer?
Televisions: the premature death of OLED? Could it be that LCDs with higher dynamic range and/or ridiculously low prices will strangle OLED in its crib?
Politics: Hillary Clinton wins the presidential election by the same margin that Barack Obama had in 2012. Does it matter who is unfortunate enough to win the booby price of the Republican nomination (previous posting on the unwinnability of this one for Republicans)? I don’t think so, but I will guess that it will be Ted Cruz based on the fact that he is a professional politician, unlike Donald Trump. With government spending now at roughly 50 percent of GDP, the election is important. As the government has grown (chart) people are more passionate about getting on the right side of this rich entity. The vote should basically come down to people who benefit from a big government (either they collect welfare, free housing, etc., work for the government, or have a close family member who works for the government, or work for a government contractor or crony (e.g., health care)) versus people who are economically disadvantaged by the government growing larger (e.g., people who pay taxes but don’t have an obvious way to collect a lot of benefits in return).
Economics: As predicted by Mancur Olson, the U.S. economy continues its stagnation, with per-capital GDP growing only slightly (of course the total GDP can still grow robustly if the U.S. population grows larger, e.g., through immigration). If we model the half of the U.S. economy that is now centrally planned by government as being like the former Soviet Union, we would expect half the economy to grow at an annual rate of between 0 and 0.75 percent. If we model the other half as being like a modern high-income free-market economy, such as Singapore or Hong Kong, that half could grow at a 3-4 percent rate (maybe at the higher end of this range due to the dead cat bounce that we’re probably still in following the Collapse of 2008). That leads to a maximum potential long-term average per capita GDP growth of about 2.4 percent, but let’s assume that the tangle of regulations imposed by the planned portion of the economy drags this down to 1-1.5 percent. If you live in one of the handful of desirable cities in the U.S. the result of this “growth” will be a reduction in your spending power due to (a) higher taxes, and (b) inflation in the cost of housing and services.
Work: The growth of the American welfare state will continue with higher minimum wages and other regulations discouraging companies from hiring the least-able Americans (see also “Can Puerto Rico be a laboratory for the future of the rest of the U.S.?” and “unemployed = 21st century draft horse?”). Higher tax rates and more lucrative child support guidelines in some states (e.g., Kansas), plus the message from politicians and meida to women that they can’t get fairly compensated in the workforce, will contribute to a continuation of the 15-year slide in the labor force participation rate of women. An increasing percentage of young women will be primarily stay-at-home wives (The inquisitive gender studies student and Sheryl Sandberg) or profit from their fertility without being married (chart showing a peak shortly after the Federal mandate for states to develop guidelines that made it easy to calculate the profits from a casual sexual encounter or short-term marriage (History); see also divorce litigators’ analysis of Ellen Pao’s career options)).
Leisure: With fewer people working and higher costs for employers making hotel rates grow faster than official inflation there will be a lot of demand for fun stuff that Americans can do from home, e.g., streaming video, video games, etc. I predict that the first virtual reality headsets will arrive in 2016 as planned but that consumers will be slow to adopt these innovations.
Health care: With no changes in financial incentives, I expect no changes in this sector (nearly 20 percent) of the U.S. economy. Due to the fact that viruses are smarter than humans, I expect no major breakthroughs in treatments.
Government: More outsourcing to cronies. From a bureaucrat’s point of view, a contract with a crony provides a great way to say “no” to the public. Instead of “We don’t want to give you that service,” a bureaucrat can say “We contracted out that function for five years to Vendor X and the contract doesn’t require them to give you that service. It is a great idea, though, and I’m sorry that they aren’t doing it.”
Businesses: Big companies will manage to work around new regulations and taxes. The keys to continued profits will include a combination of purchasing political influence, turning U.S. operations into a subsidiary of a foreign corporation headquartered in a country with lower tax rates (e.g., via an inversion), and expanding in growing markets overseas. Operating a small company in the U.S. will be increasingly untenable, unless it is a startup that can expect to be acquired fairly quickly. “Go big or go home” will continue be the message, e.g., communicated with double the effective tax rates on small corporations compared to large ones with their crews of full-time tax attorneys, offshore subsidiaries holding patents, etc.
Stocks: Due to the above, the S&P 500 should continue to grow in after-tax value at the same rate as world GDP (about 3 percent), even if the U.S. economy stagnates. (i.e., I am predicting that the S&P 500 will be approximately 60 points higher a year from now.)
Education: Mediocrity will continue to be accepted by Americans at all levels of the educational system. The U.S. will continue to spend more on this sector than all but a handful of countries (OECD chart), but most people in the education industry won’t have any incentive to achieve high performance. Incumbent nonprofit colleges will keep fighting back against for-profit colleges and increase their share of government handouts.
Cars: Innovations in self-driving and electric-powered cars will be significant and heavily publicized, but hard to deliver. Thus by the end of 2016 consumers will try to avoid buying a new car and/or enter into short-term leases in hopes that by 2017 or 2018 there will be mass-market cars with dramatic innovations.
Internet: Continued slide in readership and participation for anything that isn’t Facebook.
Income Inequality: Will continue to widen. Politicians who get a boost from complaining about income/wealth inequality will open the doors to a lot of immigrants with zero income and zero wealth, thus immediately worsening the statistics. Population growth from this immigration combined with the obstacles to building in the U.S. will favor existing owners of real property (i.e., Americans who are richer than the median). Increased complexity from regulations, taxes, and tax differentials from place to place and from company to company (e.g., depending on political connections) will favor the cleverest and best-educated (i.e., Americans who are probably richer than the median).
ISIS prediction: We won’t hear too much about ISIS in Syria by the end of 2016. Backed by the Russian military (will they trademark the phrase “What a real ally looks like”?), the Syrian government should be able to get its territory back under control. So ISIS will contract to almost nothing in Syria and grow in Iraq.
Migration into Europe: Every current migrant will tell 10 friends or family members about how well it is working out. Roughly one third of the friends/family will act on the advice. Thus there will be approximately three times as many migrants coming into the EU at the end of 2016 compared to now.
Readers: Your turn now!