What Will Drive 2005

Oil drops below $40, Rumsfeld stays, AOL goes, the Pittsburgh Steelers rule football, and -- maybe this year -- Osama gets nailed

So if BusinessWeek Online told you a year ago that George Bush would win a surprisingly close battle for reelection, the New England Patriots would win the 2004 Super Bowl, and the Boston Red Sox would win the World Series, would you have believed us? Hey, you read it here first("What's In Store for 2004").

Sure, it looks like we were a tad off on our prediction of GDP growth this year (we said 4.5%, while it appears the annualized number will come in closer to 4.4%), and we predicted 6% to 8% growth for the Dow (with an end-of-year surge, it's up 4% from its Dec. 31, 2003 close). We also opined that Osama bin Laden would be found, and the Federal Reserve wouldn't hike interest rates again until 2005. (Yikes, big misses on both counts.) But these are just predictions, O.K.? No guts, no glory.

This year, we're back with even more soothsaying for 2005. See if you agree with our team of BW Online prognosticators:

1. Standard & Poor's 500-stock index and the Dow Jones industrial average will post gains of 15% or better, as a lot will go right in the world, and many of the things we worry about going wrong will continue to not happen.

2. GDP growth for 2005 will clock in at around 4%.

3. The Federal Reserve will continue its measured pace of interest rate hikes through late autumn of 2005, as the economy continues a moderate recovery.

4. The housing market will surprise skeptics with its resilience in a period of rising interest rates.

5. The price of oil will drop below $40 a barrel sometime during the year and stay in the $40 range through yearend.

6. Elections in Iraq will proceed as scheduled in January.

7. Osama bin Laden will be found and captured.

8. Donald Rumsfeld will still be drawing a paycheck as Defense Secretary at the end of 2005.

9. Peace negotiations between the Israelis and Palestinians will resume.

10. President Bush will run into surprisingly strong opposition from fellow Republicans on his budget and proposal to partially privatize Social Security.

11. Apple (AAPL ) will come out with an iPod cell phone.

12. President Bush will be photographed carrying an iPod.

13. Flat-panel TVs will start to become affordable to most Americans. Prices will drop under $800 on some big-screen models.

14. Media-center PCs will become the rage, as computer companies and Intel (INTC ) push into digital video on demand. Watch out TiVo (TIVO ).

15. Stem cells will be able to treat vision problems and heart defects, according to substantial evidence that researchers will present. More states will follow California in providing funding for stem-cell research.

16. Chiron (CHIR ) will still be flailing when 2005 flu season rolls around. The big winner will be MedImmune (MEDI ), which will charge into the vaccine market.

17. Time Warner (TWX ) will spin off AOL.

18. At least one airline company will disappear, as air travel demand continues to sag and oil prices remain high.

19. The Pittsburgh Steelers will win the 2005 Super Bowl.

20. The New York Yankees will come back and win the 2005 World Series.

You read it here first. Happy New Year.

Edited by Compiled by Douglas Harbrecht

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