Even in normal times, economic forecasting is a risky business. In the Trump era, it has become a crapshoot.
At one extreme, there’s the tantalizing prospect of hitting the jackpot: Corporate tax laws finally get their needed reform, excessive business regulations are rolled back, infrastructure investment grows, companies invest more in creating U.S. jobs, animal spirits rise, and life is good—at least for the next few years.
Then there’s the possibility that it all unravels, with President Trump’s protectionist message sparking a trade war, or his attacks on immigrants undercutting efforts of U.S. businesses to attract the best and brightest. There’s also the possibility that by upsetting the global applecart, the President suddenly finds himself engaged in an economy-wrecking foreign policy crisis, sparked by an emboldened North Korea, Iran, Russia, or China.
Between those extremes, there are a host of questions that hang over the outlook. Can the new President overcome the chaos and distraction of his early days in office to govern effectively? Can he break away from the hot-button issues of race, gender, and religion long enough to focus on the economic prize? And given the whipped-up partisan fervor, can he successfully assemble a governing majority in Congress and push through legislation that might actually kick-start business?
Our own Shawn Tully, a perceptive observer of half a century of economic experimentation, gives his best analysis of the prospects in our cover story. Trust me, you’ll want to read it. But at the risk of giving too much away, I will say this: Like Shawn, I’m an optimist. With former Goldman sous chef Gary Cohn at his side, the new President has the best chance in a decade to get it right, helping us accelerate economic growth in a way that, ultimately, should lift all boats.
For the longer term, there are two important caveats to keep in mind. First, it’s unlikely President Trump will repeal the business cycle. The current economic expansion is already long in the tooth, and there’s little reason to think we’ll make it through the next four years without a recession. (When that happens, count on upheaval.)
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Second, the worker disruption and inequality that helped feed Trump’s victory are likely to continue unabated, fed more by technological advances than trade. Many of the U.S. jobs being trumpeted in Trump’s Twitter feed will prove ephemeral, as the impact of automation and artificial intelligence kick in. As Microsoft CEO Satya Nadella said in Davos earlier this year, we need technology to boost productivity and create an economic “surplus” that can solve many of the world’s most pressing problems. But at the same time, “we have to deal with the real issue of equitable distribution of that surplus.”
Speaking of Nadella, this month’s issue includes our annual ranking of the World’s Most Admired Companies, based on an extensive survey of business leaders. And this year, we asked a new question: Who do you think is the most underrated CEO? Guess who came out on top? Satya Nadella. He has taken a company that was once written off as a relic of the early computer era and turned it into a driving force for a new age of cloud computing and artificial intelligence. Microsoft (MSFT) tied with Facebook for the No. 9 spot on this year’s All-Star list, up from No. 17 last year.
There’s lots more in this list you’ll find interesting—including the disappearance of two regulars, Wells Fargo (WFC) and Samsung. Reputations are more easily lost than won.
Enjoy the issue.
A version of this article appears in the March 1, 2017 issue of Fortune with the headline “The Case for Optimism.”
