The Fortune staff’s well-informed predictions about the people, products, and trends that will matter in 2017.
The election of Donald Trump to the presidency represents a seismic shift in American politics, an event with implications nearly impossible to predict. One casualty of the election, indeed, may be the science of prediction itself: For all their algorithmic gymnastics, pollsters and betting markets were utterly confounded by Trump’s win. Which is why it’s essential to have a prediction tool that relies as much on art (and whimsy) as it does on science. And this year, for some extra insight, we’ve even teamed up with artificial-intelligence powerhouse IBM Watson, which mined tens of millions of sources to help us spot hidden trends. Here, we offer our well-informed, intuitive take on the stories that will shape business—and much else—in the coming year.
Next year, on-demand delivery, better virtual reality, and Internet-connected everything will keep making life easier—and riskier.
The IPO Market Is Coming Back
This year, the market for technology company initial public offerings has been weak at best. Just four small deals were completed in the first half of 2016. But since August, 10 companies hit the market, raising almost $2 billion. And it could be just the beginning. Many of the top names in startups—from big-data analyzer Palantir to ride-sharing titan Uber—have been hinting that they’ll soon be ready to go public. Plus, Snapchat has reportedly already filed for an IPO confidentially. For many VCs awaiting a payday, the tech IPO revival of 2017 should come just in time.
Watson Says: Even Your Grandma Will Use Grubhub
Amazon and Facebook have jumped into online food ordering and delivery, making a crowded field even more so. But GrubHub should remain an industry leader. Its active user total rose 19% over the past 12 months, to 7.7 million, and an unusually high volume of social media mentions (revealed by an IBM Watson analysis) suggests it’s poised for more rapid growth. Bonus: It’s already profitable.
The Internet Will Get Shut Down Many More Times
It is a great irony that a system designed to withstand nuclear war falls so easily victim to a stampede of beeping baby monitors and webcams. We’re talking about the Internet, of course. In October a number of top websites—Twitter (TWTR), Amazon (AMZN), Spotify, and more—were knocked off-line when a sprawling botnet attacked a New Hampshire firm that serves as an Internet switchboard. An army of hijacked “Internet of things” devices swarmed this choke point with overwhelming traffic. Now, far from being fixed, the problem compounds as more unsecured devices—including surveillance cameras, toasters, and other home appliances—roll off the production line with weak default passwords. Fortune tends to agree with Jeremiah Grossman of security firm SentinelOne, who said after the recent strike that it “could easily be just a canary in the coal mine.”
Virtual Reality Glitches
Gaming and entertainment firms are pouring serious money into virtual reality, betting that it’s destined to be the next big thing. There’s just one problem: Early adopters aside, consumers don’t agree.
As of November, shoppers can buy any of the big three “first-generation” headsets: Oculus VR’s Rift, HTC’s Vive, and Sony’s PlayStation VR. But there’s no sign of a mass frenzy to scoop them up: Most are finding that mere novelty can’t justify the high price tag.
To be sure, there are signs of growth in VR. Research by Deloitte expects 2016 to be the industry’s first billion-dollar year. But it’s looking likely that the rocket ship will stall in 2017, unless software makers can come up with a true raison d’être—and soon.
AOL Will Get Cool Again
Don’t look now, but the “You’ve Got Mail” progenitor is getting its groove back. With the help of a series of ad-tech acquisitions—like Millennial Media, Vidible, and Convertro—the Verizon (VZ) unit is building out a powerful new advertising platform, called ONE by AOL. It may never make it into another romantic comedy, but among tech-savvy marketers, AOL is looking downright hip.
The iPhone Will Get a Radical Upgrade
The rumor mill is already cranking with leaks about the iPhone 8, due in 2017. Marking the 10th anniversary of Steve Jobs’ original iPhone, the new model is expected to include radical changes like a super-high-resolution OLED screen that stretches from edge to edge of the device, and a home button transformed into a virtual on-screen button. Other rumored features include wireless charging capability. After the mildly disappointing iPhone 7, the next update should be a more radical hit.
Drones Will Deliver Pizza (but Not Toilet Paper)
In the past year, we’ve seen drones deliver pizza, burritos, fried chicken sandwiches, and Slurpees. Expect to see more one-off junk-food flights as companies like Chipotle (CMG) and Domino’s (DPZ) use them as marketing stunts. But anyone thinking drones will usurp delivery drivers or postal workers in 2017 will be disappointed. New FAA rules have made it a bit easier, but companies still can’t legally fly drones at night or outside the line of sight of their operators without a special exemption. A NASA national air-traffic management system is in early stages—don’t expect regular drone shipments of toilet paper or toothbrushes until it’s done.
Marissa Mayer Will Become an Investor and Startup Advisor
No more corner office for Marissa Mayer—at least not as a CEO. Expect the embattled Yahoo chief executive to step down after Verizon’s acquisition of Yahoo is complete, pocketing a reported $55 million in the process. But it’s unlikely she will run another company post-Yahoo. Why not? Not only did Mayer’s reputation decline along with the once-powerful search company’s stock, but the job market for former female CEOs is unfortunately particularly tenuous. Case in point: Since 2004, not a single female Fortune 500 CEO who was fired from her job ever got another CEO position. (Yes, Yahoo was once in the Fortune 500.) And only two women have held more than one Fortune 500 CEO gig during the same time period. Mayer’s sizable exit package should be a good start to an investing career, though.
A Tesla Will Drive Itself Across the Country (With Help)
Electric car company Tesla, led by billionaire industrialist Elon Musk, will enable one of its cars to drive itself across the country from California to New York in 2017. While the trip might make big headlines, and show off Tesla’s aggressive self-driving car tech, the Tesla venture will only be a test and likely filled with Tesla engineers ready to grab the wheel at a moment’s notice. The electric computerized road trip also won’t be the first one. That honor goes to auto supplier Delphi, which built an autonomous car that made the classic Americana trip in 2015.
Watson Says: Uber and Airbnb Will Conquer the Sunbelt
The new economy’s ride-sharing and home-sharing giants are most popular today in dense coastal cities—think New York, Boston, or San Francisco. But IBM Watson research suggests Uber and Airbnb will make more inroads in the Southwest next year: It found significant spikes in news and social media mentions of the phrase “sharing economy” in cities including Phoenix, Denver, and Dallas.
A Trump White House may defy predictability, but with Congress under GOP control, expect these early moves.
The U.S. Gets a Giant New Infrastructure Bill
President-elect Trump will make this a high priority because it will give him a speedy bipartisan win. Members of both parties love spending money on roads, bridges, airports and other infrastructure. As a former Capitol Hill staffer memorably put it, “The smell of hot tar is an aphrodisiac to legislators.”
Last year, Congress passed a five-year, $305 billion highway bill, which President Obama signed into law, but legislators will vote for more because Democrats view it as a jobs measure and Republicans crave the corporate tax reform that’s likely to accompany it.
Climate Change Rules Are Rolled Back
Trump will launch his first attack on Obama’s climate-change legacy by moving to dismantle the Clean Power Plan, the current administration’s ambitious attempt to dramatically cut carbon emissions via pollution regulations. It would probably take Trump’s team a year to unwind the rule, which was finalized in 2015 and for now remains tied up in a court challenge. But shots are likely to be fired early.
There Will Finally Be (Partial) Tax Reform
Congress will change the corporate tax code to encourage (or compel) companies to repatriate trillions in overseas cash at a low tax rate. The revenue generated by that deal will give Congress cover to pass some of the deficit-swelling income tax cuts that Trump and the GOP have backed.
The Pendulum Swings Against Immigrants
Trump won’t be able to assemble his promised “deportation force” to boot undocumented immigrants from the country. But he will rescind Obama’s executive order allowing about 800,000 immigrants who came here as children to stay on two-year work permits.
2,073: Where the S&P 500 Will Finish in 2017
Yes, stock markets rose sharply after Trump’s win. But uncertainty about his impact on growth and trade will unnerve investors who are already anxious about interest rates and overvalued U.S. stocks. Expect the S&P 500 to finish 2017 about 3% below where it closed on Election Day.
1.25%: The Federal Funds Rate at the End of 2017
The Federal Reserve spent much of 2016 hinting that it wanted to raise rates. Now, Janet Yellen and Co. have a president-elect whose economic agenda may prove to be inflationary. The economy won’t justify huge rate hikes, but we can expect three quarter-point increases between now and next Thanksgiving.
U.S. GDP Growth Will Break 2%
International agencies are signaling an upbeat message for U.S. GDP growth in 2017, with the OECD, the IMF, and the Economist Intelligence Unit all forecasting 2.2% growth or more—up from a projected 1.6% in 2016. Some banks have taken a more dour tone about the forecast, but with wages rising and unemployment low, there’s reason for a little optimism.
Oil Will Cost $50 a Barrel Next Year
The Energy Information Administration says the price of oil will tick upward in 2017, to $50 a barrel from the current $45. Others expect a bigger jump—Merrill Lynch, for example, projects the price will hit $69 by summer. We think OPEC will opt to keep production high, and thus prices lower. But either way, gas will get a little more dear.
Homebuilders Will Rise From the Dead
Home prices have risen relentlessly of late—the S&P/Case-Shiller index is up 37% since 2012—but homebuilders have not kept pace with demand, as inventory for sale has fallen 9% over that time. With wages rising and unemployment low, 2017 will be the year builders finally start building in earnest again.
Nationalism, political uncertainty, and stunted trade will create new headaches in 2017. But global prosperity will keep increasing.
China Keeps Booming
Make no mistake, when President Xi Jinping last year called for GDP growth of at least 6.5% for the coming five years, China was signaling it would prop up growth in any way necessary. The domestic debt-to-GDP ratio rose by an astonishing 28% in the 12 months through June, according to Emerging Advisors Group. The result: Real estate prices are up, consumers are spending, and GDP growth is hitting targets (though actual growth will be at least a full percentage point below the government’s official releases).
Putin Picks New Targets
The Baltic states are fairly well defended, but Russia may see a target in the Balkans. Moscow will continue to bulk up its cyber offensive too. Bad news for establishment politicians throughout the West.
Alain Juppé Will Be France’s Next President
Veteran conservative Alain Juppé will be elected President of France in May, beating Nicolas Sarkozy to the center-right UMP party’s nomination and seeing off the Front National’s Marine Le Pen in the runoff. Bonus prediction: German Chancellor Angela Merkel wins reelection, despite rising fringe groups.
Brexit Will Start, and the Euro Will Pass the Pound
U.K. Prime Minister Theresa May will trigger Article 50, formally starting the thorny process known as Brexit and further fueling concerns about the economy (scaring off capital). Meanwhile, inflation will curb ECB quantitative easing, driving the euro higher.
We’ll Get Some Good Geopolitical News in 2017
There will be much media attention on China’s disputes with its neighbors in the East and South China Seas. But words are unlikely to force truly destabilizing deeds because China’s reform process demands that China avoid trouble and because the neighbors know they can’t count on Washington to rescue them if they stumble into conflict. In addition, Colombia’s peace deal took a tumble a few weeks ago, but it will still happen because both sides want it. Finally, despite political dysfunction in both Greece and Turkey, we can expect a deal to reunify divided Cyprus. In all three cases, pragmatism prevails. —Ian Bremmer, president, Eurasia Group
Watson Says: It’s The Philippines’ Year
President Rodrigo Duterte’s penchant for vigilantism and anti-Americanism is worrying. But he has taken over an economy that’s hitting its stride: Economists expect Philippine GDP to grow 6.2% next year. One clue to a looming boom: An analysis by IBM Watson of some 700,000 global news sources found a high concentration of mentions of infrastructure investment linked to the country.
Next year’s crazes will include Star Wars (expect the new one to win at the box office), athleisure (comfort is king), and novelty fast food (sorry, calorie counters).
A Fortune 100 Company Will Go Office-Free
The first to go was the personal office. Then the cubicle bit the dust. Now even the open office is at risk, with the rise of “hot desks” that belong to everyone and no one. In 2017 the slow dissolution of the workplace will reach its natural conclusion: The first Fortune 100 company will jettison the office altogether. After all, why foot a hefty real estate bill when telecommuting is an option? A backlash may be brewing, though, as mentoring drops off, laptop-bound workers report ergonomic issues, and employees burn out when they find themselves literally living at the office.
High Heels Go Out of Style
If we’re to take Victoria Beckham’s word as gospel (as we should), women will pitch their sky-high stilettos once and for all. The style legend famously ditched her Christian Louboutins this year for comfy sneakers, and women will follow in her newly cushioned footsteps. Increasingly health-conscious consumers now see high heels—once the epitome of elegance—as an unnecessary bodily risk.
Old Havana Beats Out Old San Juan (for Now)
Cuba’s tourism ministry expects a record number of visitors this year: 3.8 million, up 19% from the previous year’s high. If the momentum holds in 2017, the number of foreign visitors to Cuba will surpass those to Puerto Rico and the U.S. Virgin Islands combined. But the surge may be short-lived: Once American visitors realize that those 50-year-old classic cars belch noxious fumes, tourism will drop off.
Star Wars VIII Will Be the Year’s Biggest Release
Star Wars VIII will be the biggest film of next year, yes, but that’s not all. Expect it to blow past last year’s installment—which was the third highest grossing film globally of all time, according to Box Office Mojo. Last year, Disney likely breathed a sigh of relief when critics and diehard fans alike loved The Force Awakens. Despite three underwhelming prequels, the movie sold tickets faster than the Millennium Falcon jumping into hyperspace—collecting more than $2 billion in global sales. So, how can the 2017 follow-up possibly top those huge numbers? Well, along with pleasing existing fans, The Force Awakens also inspired a new generation of Star Wars devotees in the U.S. and overseas (the original trilogy didn’t even screen in China until 2015). Those new fans will have been waiting eagerly for two years by Dec. 2017, and they’ll all be lined up at theaters around the world.
Watson Says: Ross Will Go On A Retail Rampage
Ross Stores is on a roll: Analysts expect the discount retailer’s sales to rise 7% next year, to $13.6 billion—surpassing department-store giant J.C. Penney. Revenue has soared under CEO Barbara Rentler, who is reclusive but well liked. In an IBM Watson analysis of mentions of CEOs in news articles and social media, Rentler scored some of the highest positive “sentiment scores.”
These Are the Next Food Mashup Stunts
This year Burger King tried to take a bite of Chipotle’s lunch with its Whopperrito, and McDonald’s took a pass at Starbucks’ seasonal magic with pumpkin-spiced fries. Here, the weird ways food giants will (or, okay, might) try to knock each other off in 2017.
– DQ takes a page from Taco Bell with the Black Bean Blizzard Supreme.
– KFC 12-piece Bucket of Cheeseburgers.
– Applebee’s Tuña Colada: rich in omega-3s and rum. Look out, Long John Silver’s.
Helped along by low interest rates, the merger boom of 2016’s last quarter will keep rolling.
Comcast Will Buy T-Mobile
T-Mobile has been by far the fastest-growing U.S. wireless carrier since John Legere took over as CEO in late 2012, and has more than doubled its subscriber base, to 69 million. Sprint made a run at the company in 2014, but antitrust regulators waved it off. That likely wouldn’t be an issue for a buyer like Comcast (CMCSA), which has said it plans to offer a wireless service in 2017.
Private Equity Will Nab Hewlett Packard Enterprise
Now that it has sold off most of its software and enterprise services units to focus on high-end servers, storage, and data-center tech, the trimmer version of the once-mighty company will tempt buyers. Rumors are already circulating that private equity firms like what they see.
Simon Property Will Acquire Sears
Simon Property Group (SPG), the largest U.S. mall developer, formed a joint venture with Sears (SHLD) last year to hive off some of its best locations and charge other retailers a premium. It follows that Simon could go one step further and buy the chain outright, then sell off or carve up the remaining space for other stores.
Amazon Will Make a Play for Barnes & Noble
After years of competing with physical bookstores, Amazon is building them. The tech titan has opened or announced four locations so far but is rumored to be planning more. Conveniently, Barnes & Noble (BKS) has 638 stores and a market cap of $760 million—a pittance for its deep–pocketed rival. The risk? Antitrust regulators will close the book on it.
Slack Will Sell Out
Slack, the business-oriented chat product, has tons of traction if not profit. It would make a nice pickup for a company that wants to acquire potential customers and perhaps bask in Slack’s reflected glow. Any Slack acquisition—by IBM? by Cisco? by Oracle? by Salesforce?—would follow in the footsteps of Microsoft’s 2012 buyout of chat platform Yammer.
A Major Player Will Buy Netflix
There have been plenty of rumored suitors for Netflix, including Apple, Google and even Disney. Any company in the entertainment space drools at the company’s millions of subscribers and its growing stable of movies and TV shows. It would be an expensive mouthful, to be sure, with a market value of $50 billion. Plus Netflix CEO Reed Hastings has said he doesn’t want to sell. But he may not have much of a choice if the company’s spending on content keeps ramping up—it will hit $6 billion next year and it’s still growing. While it would take a suitor with very deep pockets, Netflix may have to go courting if its stock price starts to flag.
Under Armour Will Merge With Lululemon
Stretchy pants, meet basketball shoes. Under Armour’s (UA) success outfitting the male gym-goer is matched only by Lululemon’s (LULU) strength with yoga-loving women. A partnership could look good on both.
A Streaming Service Finally Wins an Oscar
Netflix’s 13th, by Selma director Ava DuVernay, is a strong contender in the doc genre, and Amazon’s devastating drama Manchester by the Sea is getting buzz.
Disney Will Name Its Next CEO
The departure of Disney’s COO and heir apparent in April left CEO Bob Iger without a clear successor. Iger’s contract ends in 2018, and if it’s not renewed, Disney (DIS) may have to nab an outsider as there’s not much time to groom an internal candidate. (Paging Sheryl Sandberg?)
We’ll Add More Solar Capacity Than Any Other Type of Power
As coal continues its decline, and wind and natural-gas growth slows, solar power just keeps getting cheaper. In 2017 more power companies looking to expand will turn skyward. Expect big new solar farms in remote areas.
Super Bowl Viewership Will Slip
NFL ratings are lagging this season. That’s partly because of the election, but also because of concussion concerns and domestic violence scandals. Our bet: This game gets 110 million viewers, down a bit from last year. Our other bet? It’s Cowboys vs. Patriots.
Ecuador Kicks Out Julian Assange
With its oil-exporting economy in recession and in need of investment, Ecuador may boot the WikiLeaks mastermind from its U.K. embassy as an olive branch to Europe and the U.S.
Barack Obama Will Get a $20 Million Book Deal
The post-presidential book deal is a time-honored moneymaker for past Presidents. But Obama, already the author of a writerly bestseller and a historic figure as the first African-American president, will command a higher premium than most.
There Will Be a Climate-Change-Driven Refugee Crisis
Hotter days, rising oceans, and extreme weather—already contributors to migration—will displace more people in 2017, particularly in low-sea-level areas.
Gourmet Burgers Get Hot (Cow Optional)
Pricey grass-fed beef sales grew 25% in the past year, while plant-based protein surged 35%. That combo only seems odd: Credit both rising trends to health and climate concerns.
Watson Says: The Next Big Drug Breakthrough—Beating Drug Resistance
A bit of sobering news on the threat of growing antibiotic-resistance: An IBM Watson study of news sources and medical journals found a surge in mentions of late-stage trials related to CABP, a pneumonia associated with drug-resistant infections. Luckily U.S. drugmaker Cempra and Austria’s Nabriva each have drugs that are close to formal approval.
We predicted correctly that slow growth and caution about the political climate would mean the Fed would raise rates only once in the past 12 months. We called an ongoing real estate boom (some would say bubble) in China. We predicted that new endorsement deals would put Serena Williams atop the female athlete earnings list. And we read the political tea leaves to predict that Sen. Tim Kaine would become Hillary Clinton’s running mate.
In the Ballpark
We warned that an email hack linked to foreign intelligence agencies would make news. (Hello, John Podesta.) And we predicted that hoverboards would be a hot item—roughly 3 million have been sold in the U.S.—but we missed that many would be so hot they’d catch fire.
Off the Mark
Ask us about the “Rubio/Haley 2016” T-shirts gathering dust in our garage. Like most of the media, we didn’t see Trumpism coming. We were also overoptimistic about tech, predicting a 22% surge for Apple (AAPL) shares (instead they fell) and a breakthrough in nuclear fusion. (Still a Star Wars–only technology, alas.)
Contributors: Christina Austin, Kristen Bellstrom, Scott Cendrowski, Geoff Colvin, Barb Darrow, Katie Fehrenbacher, Alex Fitzpatrick, Erika Fry, Robert Hackett, Matt Heimer, Tom Huddleston Jr., Mathew Ingram, John Kell, Linda Kinstler, Beth Kowitt, Michal Lev-Ram, Polina Marinova, Chris Matthews, Tory Newmyer, Burcu Noyan, Roger Parloff, Aaron Pressman, Jeff John Roberts, Geoffrey Smith, Anne VanderMey, Jonathan Vanian, Phil Wahba, Valentina Zarya, and Claire Zillman
A version of this article appears in the December 1, 2016 issue of Fortune. This story was updated at 7:30 a.m. Nov. 16 to eliminate a discrepancy between the online and print versions.