What does 2012 hold for the worlds of personal finance, business and investing? We canvassed a wide variety of pundits and prognosticators and chose the 7 predictions below as being among the most surprising, thought-provoking or useful. As for accuracy… Well, they've still got 12 months to be right.
An Economic Recovery That Worsens Unemployment. How could that be? Easily, predicts Derek Thompson writing in The Atlantic. Recent months, he says, have seen the unemployment rate drop below 9 percent "for the simple reason that as many people are dropping out of the workforce as are finding work." When the economy bounces back, he argues, those people will re-appear in the labor force by the millions, driving up the unemployment rate. "A few more jobs divided by a LOT more job seekers means a lower employment rate." He predicts the rate "will get closer to 11 percent before it gets closer to 6."
Wheat Prices That Double. Saxo Bank 's prognosticators don't limit themselves to predicting events they think are likely to happen. They throw their net wider to include what the bank calls outrageous predictions--"events which, should they happen, would change the outlook and performance of markets." For 2012, their list of what they call "outrageous" predictions includes a doubling in the price of wheat. "The price of wheat will double during 2012, after having been the worst-performing crop in 2011," reads their report. Weather worldwide is forecast to be bad, making 2012 "a tricky year" for agricultural products. "With 7 billion people on the earth and money-printing machines at full throttle," Saxo concludes, "wheat especially will rally strongly as speculative investors…will help drive the price back towards the record high last seen in 2008."
E-tailers Will Wallop Retailers Even Harder. It's not as if brick-and-mortar retailers didn't lose business in 2011 to online sellers of everything from books to shoes. But Marc Andreessen, co-founder of Netscape and head of California venture capital firm Andreessen Horowitz, predicts those inroads will cut far deeper in the coming year. 2012, he tells CNET's Paul Sloan in a wide-ranging Q&A, will be the year when conventional retailers really start to feel the heat, with more and more going the way of Borders and Tower Records. "If I own[ed] mall real estate or retail stores in cities, or if I own[ed] chains like electronics chains, I'd be concerned…I think electronics and clothes are going to be a real pressure point. Home furnishing is going to come under pressure. The flip-side? "Amazon is going to do really well."
Bonds: One bright spot. Bill Gross, manager of the world's largest Total Return Fund, tells The New York Times he thinks interest rates are unlikely to rise, meaning there will be few opportunities in 2012 for bond investors. One exception: tax-free municipal bonds, an asset class that he calls under-valued, owing to scare headlines about municipal bankruptcies and threatened defaults. Just because a handful of municipalities have declared bankruptcy, he says, doesn't mean that many more aren't sound. The average A-rated bond pays 4 to 5 percent, tax-free.