In Case You're Wondering What 2001 Will Bring...


Editors Note: On Jan. 4, BW Online republished our fearless predictions from 2000, "Win Some, Lose Some...", with notes on how we did. Here are a few predictions for 2001 -- our own space odyssey, if you will. We asked our far-flung network of correspondents to come up with some insights, educated guesses, and a few leaps of faith for surmising the new year. Here we go:

THE ECONOMY

Dow Jones industrial average on Jan. 2, 2001: 10,646

Dow Jones industrial average on Dec. 31, 2001: 11,500

Nasdaq Composite on Jan. 2, 2001: 2292

Nasdaq Composite on Dec. 31, 2001: 2800

The U.S. economy will slow to a 2.0% annual growth pace in 2001 and yes, avert a recession. But it may well feel like one.

In addition to the 50-basis-point cut on Jan. 3, the Federal Reserve will drop interest rates two more times, in quarter-point increments. But that'll be it.

Oil prices, now around $28, will remain relatively stable, but high -- in the $28 to $32 range.

Despite an all-out push for his $1.6 billion tax cut, President-elect George Bush will win only a watered-down version of his tax legislation on Capitol Hill. Virtually unrecognizable from his original proposal, the final bill will favor wealthy taxpayers over small-business owners.

POLITICS

The Democrats could regain control of the Senate -- now tied 50-50 with Vice-President-elect Richard Cheney as the tiebreaker -- earlier than expected. This will be due to the untimely and unfortunate death of a current Republican member in 2001. Note: In the past two years, two GOP senators have died, as has one Democratic Senate candidate.

President-elect Bush, who defeated maverick Senator John McCain (R-Ariz.) in the 2000 Republican Presidential primaries, will get the best of his rival once again in 2001. Reformer McCain's efforts to ban unlimited "soft money" political contributions will be stymied in Congress. The reason: Some previous Republican supporters of McCain's campaign-finance reform package will back off under pressure from the Bush White House. Instead, a much-trimmed package that increases the $1,000 maximum contribution from individuals and tightens disclosure requirements will be signed into law by Bush. McCain and his nemesis will shake hands, but McCain won't be happy.

Watch for Democrats to win two governor's contests in 2001, both currently held by Republicans. In Virginia, wealthy tech exec Mark Warner, a pro-business centrist, will recapture the governor's mansion for the Democrats after eight years of Republican rule. In New Jersey, Democrat Jim McGreevey, mayor of Woodbridge Township, will roll to victory four years after narrowly losing to Republican incumbent Christie Whitman. Note: The off-year governor's races historically have been good predictors of the congressional elections a year later.

President Clinton will sign a book deal to write his memoirs within six months of leaving office. His deal will dwarf the $8 million Senator Hillary Rodham Clinton is reportedly set to receive for her yet-to-written memoirs.

INTERNATIONAL AFFAIRS

China will be admitted to the World Trade Organization -- but Beijing's rulers will have second thoughts about membership as they struggle to comply with the many market-opening promises they make. A political crisis could ensue, as state-owned enterprises and farmers, particularly in Central and Western China, rise up to protest layoffs and financial hardship brought on by compliance.

The U.S. will lose its biggest case yet before the WTO. Watch for a panel to rule that the legislative fix to tax exemptions for what are known as "foreign sales corporations" isn't a fix at all. The WTO will uphold its initial ruling that the $4 billion-a-year tax break is an illegal export subsidy. Major U.S. corporations will howl.

The next big international crime in cyberspace: Russian hackers, using techniques of increasing complexity, could dupe credit-card companies out of millions in online scams.

Chances for a Mideast peace agreement between Israel and the Palestinians: less than 25%.

BUSINESS

Watch for NBC, which has spun off assets under General Electric, to become a major buyer in 2001, possibly bidding for Hughes' DirecTV unit from General Motors. The Peacock network could eventually merge with film studio MGM.

Rather than spinning off its cable unit as a separate company, AT&T will decide instead to sell its cable systems, attracting suitors that include Comcast and Time Warner.

Expect more layoffs from Firestone, as financial woes from its 6.5 million tire recall spill into 2001. Don't be surprised if the National Highway Traffic Safety Administration will find fault in March with both Ford and Firestone. (Ford for recommending a tire pressure that was too low, and Firestone for a manufacturing defect.) The furor won't subside: Public-safety groups and trial lawyers will demand that Firestone should recall every tire it has ever made.

Prepare for more headaches at overtaxed airports. Congress will try to ease consumer frustration with a Passenger Bill of Rights. But heavy lobbying from the airlines makes it a no-go.

High-speed rail won't be Amtrak's ticket to profitability after all. The other 19 trains that are scheduled to run on Northeast tracks come June, 2001, will also suffer time delays. Amtrak could finally begin talks to sell off unprofitable routes just to survive.

LEGAL AFFAIRS

Look for at least a partial victory for Microsoft in the Circuit Court of Appeals for the District of Columbia. The court is likely to vacate the ruling by Federal Court Judge Thomas Penfield Jackson ordering the breakup of the software giant and will send the case back to the trial court for further consideration -- probably to a judge other than Jackson. Jackson accepted the Justice Dept.'s breakup plan word-for-word with no real hearings. The court may also throw out some of Jackson's legal conclusions as well. Then settlement talks could begin in earnest.

Under the helm of conservative John D. Ashcroft, Justice will likely approve the merger of U.S. Air and United -- but only after asking for substantial divestitures beyond the surrender of takeoff and landing slots at Reagan Airport that is already on the table. The one fly that could get in this ointment: If Justice asks for U.S. Air's highly profitable Northeast shuttle, both sides will pull out of the deal.

THE NET

Free music on the Internet will lose its luster, as Napster and MP3.com embrace for-profit business models and never look back. A host of other free sites will pop up on the Net -- but they won't be as easy to use. Finding and downloading free music will become a chore.

The carnage from the dot-com meltdown will become fierce in the first half of 2001, as literally thousands of pure Internet companies lose their funding and go out of business. But the shakeout will abate in the second half.

Internet banner ads don't bounce back in 2001. Expect the online advertising market to remain in the doldrums.

ENTERTAINMENT

The year's biggest film: Steven Spielberg's futuristic A.I. (Artificial Intelligence). The biggest bomb: Jurassic Park 3, directed not by Spielberg but by Jumanji director Joe Johnston.

Plunging ratings prompt ABC to scale back Regis Philbin's Who Wants to Be A Millionaire to one night a week.

After a strong first few weeks, ratings tank for the second Survivor series, prompting several sponsors to wonder why they ponied up $18 million to have their products shown in the Australian outback.

Winner of the 2001 Super Bowl: The Tennessee Titans.

Winner of the 2001 World Series: The New York Yankees, a four-peat.

ODDS AND ENDS

Fake fur will replace leather as the fabric of choice among fashion-savvy women.

Say goodbye to knee-high boots. Say hello to women's flats in the workplace.

The most popular names for baby boys -- Jacob, Michael, and Matthew -- will be set aside for the top name in 2001: Chad. Just look at those dimples...


Toyota's Hydrogen Man
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