text: By David Nelson CFA 
   
   Sentiment coming into 2017 was mixed, mostly divided around political affiliation. Those in support of change pointed to aggressive growth expectations on the heels of tax reform and deregulation. On the other side, economists like Nobel Laureate Paul Krugman believed expecting anything approaching 3-3.5% GDP was little more than economic arrogance. 
   
   Investors have cast their votes driving up U.S. stocks more than 20% in 2017. Today, as we approach the end of the year it’s natural for those same investors to turn their attention to 2018 and beyond. It’s a ritual as old as markets but fraught with risk. After a 20% rise in stocks Wall Street has become unquestionably bullish with Oppenheimer’s John Stolzfus already announcing an S&P 500 target of 3000 for next year. Even Goldman which spent much of the year focused on the downside is looking for a modest rise on the heels of tax reform. 
   
   One thing about crystal balls. When you look at the beginning of the year they seem decidedly clear with all but a GPS moving map showing us the path down the Yellow Brick Road. Unfortunately, just when you need it most it starts to malfunction failing to alert you when the Wicked Witch of the East zooms in for the kill. 
   
   The danger in these predictions is that more often than not we extrapolate recent history into the future. If the market was up in the last year, than by all means it should continue. If we’ve been in a prolonged downturn than of course expect markets to continue to struggle. 
   
   The most dangerous predictions of all are those that go out 3-4 even 5 years. Anyone making long term predictions about how something as complex as the world economy is going to react 5 years from now, is likely on par with my prediction the New York Jets will re-sign Joe Namath and win the Super Bowl in 2020. 
   
   The above doesn’t make predictions a useless exercise. It’s ok to plan ahead but explore both sides of the issue knowing that your opponent’s crystal ball may be more accurate than your own. 
   
   I currently fall into that same camp as many extrapolating 2017 a very good year into the next. PMI data around the world points to geosynchronous growth which doesn’t happen all that often. Strength in overseas markets means our customers are doing well and that’s great news for U.S. multinationals. 
   
   Markets are driven by all sorts of factors but in the long run they follow earnings. There are any number of items in this tax bill I don’t agree with but if the corporate rate comes in anywhere close to 20%, then 15% earnings growth is doable. $150 in S&P earnings isn’t out of the question. 
   
   Add the fact that these very same large caps will get access to a couple trillion dollars parked off shore and the picture looks pretty bright. The question is; what will they do with it? I’ve been critical of CEOs for focusing too much attention on buybacks. I believe, we’re at the beginning of a capex cycle as CEOs understand that they have to start growing the top line if they want to remain competitive. 
   
   Buybacks are slowing 
   
   
   
   
   
   Buybacks have already started slowing, peaking in early 2016. You’ve heard me say this in any number of interviews; “the next leg of the bull market isn’t going to come on the heels of financial engineering.” There are too many examples of buyback casualties that bought back their own stock at higher prices effectively destroying capital. 
   
   Story Continues ||||| We polled the experts, consulted the analysts, and read the white papers. Herewith, Fortune’s best guess for what will happen to the economy in 2018. 
   
   The article is part of the Fortune 2018 Crystal Ball, our predictions for the year ahead. Find the whole list here. 
   
   Tax Reform Passes…but GDP Can’t Reach 3% 
   
   President Trump and the GOP-led Congress are able to enact some corporate tax reforms, but learn that tax cuts alone can’t quickly compensate for an aging population and an under-skilled middle class. GDP grows by 2.5% for the year. 
   
   The Federal Funds Rate lands at 2.25% the end of 2018. 
   
   Yuge economic growth remains elusive, but continued low unemployment puts enough upward pressure on wages and prices to prompt more rate hikes from the Federal Reserve and new chairman Jerome Powell. The Fed’s benchmark tops rate 2% for the first time since the 2008 financial crisis. 
   
   Oil Will Cost $55 a Barrel Next Christmas 
   
   Politics and the occasional disruptive summer storm will make the price of crude fluctuate plenty in 2018. But U.S. shale oil will keep the domestic supply flowing, putting an expiration date on any price spikes. No need to pawn the SUV just yet. 
   
   Home Prices (Barely) Rise 
   
   Zillow asked more than 100 economists and real estate experts where they thought home prices would wind up next year. The average answer? Up by 4.1%—significantly slower than the current rate of about 6.9% growth. 
   
   The U.S. IPO market jumps to life again 
   
   Last year was particularly weak for domestic IPO proceeds, at just $16.2 billion. That ticked up to a projected $39.7 billion this year, and—according to global law firm Baker McKenzie— will hit $70.9 billion in 2018. Investors will thank a robust stock market and tech companies for the boost. 
   
   A version of this article appears in the Dec. 1, 2017 issue of Fortune as part of the Fortune 2018 Crystal Ball package. Click here to see our full list of predictions.
target: – It's that time of year when financial experts are asked to dust off their crystal balls and tea leaves and offer up their predictions for the economy in 2018. At Yahoo Finance, David Nelson warns that the problem with these predictions is that experts tend to extrapolate, i.e., believing a healthy market will continue to be healthy, and vice versa. That said, he admits he falls "into that same camp as many extrapolating 2017 a very good year into the next. ... Strength in overseas markets means our customers are doing well and that's great news for US multinationals." We round up five predictions from Fortune and WalletHub, which notes its last six years of predictions have been relatively prescient, with an average GPA of 3.56.