Predictions for 2023: A roundup
36 predictions from around the internet about streaming, crypto, clean tech, AI, the economy, war, and more.
Welcome to Nonrival, the newsletter where readers make predictions about economics, business, and tech.
Usually, Nonrival asks readers to make concrete, specific, probabilistic predictions so that we can keep score and encourage readers to improve their accuracy. This week is different. It’s a roundup of 2023 predictions from around the internet on the topics that Nonrival covers. Most of these predictions are not precise and don’t come with probabilities attached (though a few do). But they’re still interesting, and you can expect the newsletter to cover many of these topics in the upcoming year.
I’ve broken the 36 predictions up by topic:
Table of contents
Artificial intelligence
ChatGPT upends education — Hard Fork, New York Times
Casey newton: Medium-confidence prediction — I think that in 2023, ChatGPT and tools like it are going to upend the world of education… So last week, we talked a lot about ChatGPT, this AI chat bot. And afterwards, we got this wonderful email from a teenager who said that more and more kids in her class are using it to do schoolwork. She told us she was able to finish a science project with it. She also used it to make a poem that she wrote better, and her classmates are doing really similar things. So it just seems obvious to me that more and more kids are going to start doing this as soon as they can.
Covid’s aftershocks
The US will not approve a nasal vaccine for Covid-19 — Vox Future Perfect (90 percent)
For a long time, we’ve been hearing about how Covid-19 vaccines delivered through the nose would likely prevent more infections than shots in arms. And China, India, Russia, and Iran have already greenlit vaccines taken through the nose or mouth. Alas, not the US. Nasal vaccines created by American researchers have been tested in animals, but human testing has been held back for a few reasons. A big one is the lack of funding: Biden has asked Congress for more money for next-generation vaccines, but Republicans have resisted. Current estimates put nasal vaccines years away for the US. That’s depressing, but the indications suggest it’s accurate.
Office space in cities rebounds — After Hours, Felix Oberholzer-Gee
My prediction is that at the end of 2023, we will decide that the market for office space in big cities is just fine — there is no problem… The story is affluent households leave the city, as a result, there’s less tax revenue, workers don’t have to go back to offices, and there’s fewer restaurants and that means less tax revenue… I think these predictions are totally wrong… All these doom predictions in the end fail to see just how many companies clamor to be in the big cities and just feel totally priced out.
Crypto / web3
Bitcoin and Ethereum will gain value in 2023 — Fred Wilson, Union Square Ventures
I think the large caps in web3 (BTC and ETH mainly) will start to attract more interest from investors and should do well in 2023. I am more bullish on ETH personally because it has the best underlying economic model of any web3 asset.
Like the startup sector more broadly, web3 will go through a triage of sorts in 2023. Projects and protocols that have found product market fit, have real token economics, and ship new features quickly will attract new interest and rise in value. But many web3 projects have not found product market fit, have weak or no token economics, and do not execute well and I think we will see many of them continue to flounder and fail in 2023.
Energy transition
Tesla fades away — Quartz
Some think Tesla still has plenty of room to fall next year, arguing that the fundamentals of the business don’t make sense. “Tesla is currently valued at more than the next three largest automakers combined, despite selling just 5% of the cars that those automakers sold in 2021,” noted Gordon Johnson, an investor who has been shorting Tesla for four years…. Perhaps the ship will right itself, in kinder economic waters. (Tesla bulls are counting on a sales surge when a federal tax credit for American-made EVs arrives and Tesla launches its long-promised Cybertruck.) Equally, though, we may find that 2022 was not just Tesla’s year from hell but the beginning of a deep correction.
GM gains in the electric vehicle market — After Hours, Mihir Desai
It is going to be the first year when we have lots and lots of [EV] models introduced by lots of players and in particular I want to highlight GM. I think GM is going to be coming out with lots of interesting models, not the least of which is the Silverado… The winner I think is GM.
Geopolitics
India becomes the world’s most populous country — UN via Quartz
The year 2023 is when India is likely to surpass China as the world’s most populous country, the UN has said. In 2021, India’s population was 1.412 billion, compared to China’s 1.426 billion and by 2050, it’s expected to increase at a much higher rate.
China won’t invade Taiwan — Vox Future Perfect (90%)
China will not launch a full-scale invasion of Taiwan (90 percent)… People I take seriously are genuinely concerned that China is gearing up for an invasion of Taiwan this decade… But I have a hard time getting over the fact that an invasion would be outrageously costly for China in terms of blood and treasure and international esteem, and that these costs would almost surely outweigh any benefits.
The most likely sources of global conflict are… — Council on Foreign Affairs
The majority of Tier I contingencies now concern either potential flashpoints involving the major powers (e.g., a crossstrait crisis around Taiwan, escalation of the war in Ukraine, and instability in Russia) or nuclear weapons development by Iran and North Korea. The risk of the United States becoming embroiled in a military confrontation with either China or Russia (and conceivably both simultaneously) has risen. Although no Tier I contingency was judged to be very likely in 2023, it is still sobering that each was given an even chance of occurring…
…In total, seven contingencies are considered top-tier risks:
Likelihood: Moderate; Impact: High
An escalation of coercive pressure by China toward Taiwan, including heightened military activity, precipitates a severe cross-strait crisis involving the United States and other countries in the region
An escalation of the armed conflict in Ukraine resulting from the employment of unconventional weapons, spillover into neighboring countries (including cyberattacks on critical infrastructure), and/or the direct involvement of NATO members
A highly disruptive cyberattack targeting U.S. critical infrastructure by a state or nonstate entity
Popular dissatisfaction with the war in Ukraine and worsening economic conditions lead to growing civil unrest in Russia and a power struggle in Moscow
An acute security crisis in Northeast Asia triggered by North Korea’s development and testing of nuclear weapons and long-range ballistic missiles
A military confrontation between Israel and Iran over Iran’s nuclear program and its continued support for militant groups in neighboring countries
Increased violence, political unrest, and worsening economic conditions in Central America and Mexico, aggravated by acute weather events, fuel a surge in migration to the United States
IPOs & M&A
Meta separates social from VR — Mark Sherman, Telstra Ventures, via Axios
"Mark Zuckerberg will separate the social media assets (Facebook / WhatsApp / Instagram) from Meta and spin out Meta as a separate business (Oculus / Metaverse assets) that he'll lead." — Mark Sherman, Telstra Ventures
Big tech splits up — Mihir Desai, After Hours
I think it’s time for two of the following four companies to do a large-sized split: Meta, Google, Amazon, and Disney. Two of those four will do something very large in terms of a spinoff or split. The least likely of them is Amazon… I think in Disney it’s a clear story that something big has to happen… But the most intriguing one to me is Meta.
Instacart will go public — Crunchbase
Instacart is kind of the startup equivalent of the “always a bridesmaid never a bride” cliche. It’s always high on lists of likely public market entrants, but has never actually consummated an IPO. Well, we think 2023 will be the year. (Yes, we said that last year too, but cut us some slack.) An offering started looking even more likely after the company confirmed in May that it filed a confidential draft registration with U.S. securities regulators, with a debut currently expected to come next year. The filing followed a steep write-down, as Instacart cut its valuation in March from $39 billion to $24 billion.
Macroeconomy
The UK will enter recession if it’s not in one already — economists via Financial Times
The UK will face one of the worst recessions and weakest recoveries in the G7 in the coming year, as households pay a heavy price for the government’s policy failings, economists say. A clear majority of the 101 respondents in the Financial Times’ annual poll of leading UK-based economists said the inflationary shock caused by the coronavirus pandemic and the Ukraine war would persist for longer in the UK than elsewhere, forcing the Bank of England to keep interest rates high and the government to run a tight fiscal policy. More than four-fifths expected the UK to lag its peers, with GDP already shrinking and set to do so for much or all of 2023.
The US will experience a recession in 2023 — Vox Future Perfect (70%)
The US will slip into recession during 2023 (70 percent)… Put the current data and the historical analogies together and it’s hard to believe that the US won’t avoid at least a mild recession next year, especially since economic decision-makers are all basically acting as though one is imminent.
The US will not experience a recession in 2023 — Goldman Sachs
Part of our disagreement with consensus arises from our more optimistic view on whether a recession is necessary to tame inflation. We have argued this year that an extended period of below-potential growth can gradually rebalance supply and demand in the labor market and dampen wage and price pressures with a much more limited increase in the unemployment rate than historical relationships would suggest. We see this adjustment process as having gone quite well so far, though there is much further to go in 2023.
If there’s a debt crisis in the Eurozone, Italy’s the most likely target — economists via the Financial Times
Italy is the eurozone country most susceptible to a debt crisis as the European Central Bank raises interest rates and buys fewer bonds in the coming months, economists say. Nine out of 10 economists in a Financial Times poll identified Italy as the eurozone country “most at risk of an uncorrelated sell-off in its government bond markets”.
Shipping rates go back to normal — Quartz
2022 is ending with 42 consecutive weeks of decline in Drewry’s container price index, starting from a high of $10,377 per 40-foot container in September 2021 and plummeting 77% to $2,120 by Dec. 22, 2022. It remains to be seen whether container prices will bottom out below the pre-pandemic average rate of $1,420, but there’s no doubt the crisis is unwinding.
The S&P 500 will end 2023 at 4000 — Bank of America
Markets turn “risk on” in mid-2023: With inflation, the U.S. Dollar and Fed hawkishness peaking in the first half of 2023, markets are expected to tolerate more risk later in the year. The S&P 500 typically reaches its bottom six months ahead of the end of a recession, and as a result, bonds appear more attractive in the first half of 2023, while the backdrop for stocks should be better in the later half. We expect the S&P to end the year at 4000 and S&P earnings per share to total $200 for the year.
Core goods inflation will turn negative — Goldman Sachs
One of our largest forecast misses in both 2021 and 2022 arose from mistiming the supply chain recovery, which was delayed by further global shocks and in turn delayed the disinflationary impulse from the goods sector that we had expected to push core inflation meaningfully lower this year. But now supply chain recovery finally appears to be underway, lowering costs and enabling production of scarce items like autos to recover, as Exhibit 9 shows. As inventories are rebuilt, competition should reverse the scarcity effects that raised retail margins and consumer prices earlier in the pandemic.
China grows faster in 2023 than in 2022 — Bank of America
We’re forecasting 5.5% GDP growth for 2023, which is well above the consensus of 4.9%. One reason is that China’s sluggish pace of about 3% for 2022 creates a low hurdle for greater growth next year. A consumption-led recovery could actually be quite significant, as economic activities resume and more people leave their homes and travel to see their loved ones. There are bound to be challenges, but we expect substantial growth to resume by late in the second quarter, with the strongest rebound starting in the third.
Politics
Trump will be the frontrunner heading into 2024 — Vox Future Perfect (60%)
Donald Trump will be the frontrunner for the Republican nomination heading into 2024 (60 percent)… My belief that Trump’s the frontrunner (and will remain so per Polymarket come December 2023) comes from having seen Trump perform in a competitive national primary before, and from knowing that DeSantis has not waged a campaign at this scale, and not against Trump.
Politics will move further to the left — The Economist
In 1979 a doubling of oil prices, which followed a decade of stagflation, brought about a swing away from cosy co-operation between the state and business towards a bigger role for markets and private enterprise. Might 2023 be another such year? It comes as a decade of low interest rates is ending, as high energy prices and inflation return to the world economy, and as war stalks Europe. It also comes in the wake of one of the deadliest pandemics in history and as China retreats from closer global integration. If these trends were to presage broad political shifts in rich countries, you might expect politics to move left, if only in reaction to the mainly centre-right governments that dominated rich democracies during the previous decade. That already appears to be happening.
A debt ceiling standoff will rattle financial markets — Goldman Sachs
Will the debt limit have as negative an impact on financial markets in 2023 as it did in 2011? Yes. The political and fiscal conditions next year will be similar to the last two extremely disruptive debt limit increases, in 1995 and 2011… Prior disruptive debt limit standoffs led to increased market volatility and a sell-off in Treasury securities maturing around the debt limit deadline, and we would expect this to occur next year.
Social media & gaming
Apple will release an AR/VR headset — Quartz
Apple prepares to enter the metaverse. The Cupertino, California giant is widely expected to release its first-ever AR/VR headset, and it’s been hiring for dozens of roles.
The US bans TikTok — Hard Fork, New York Times
Kevin Roose: My medium-confidence prediction is that 2023 is the year that TikTok gets banned in the United States… It’s a little bit of a cheat, because I think just this week, we’ve seen an escalation of the TikTok battle. Marco Rubio and a bipartisan group of House legislators proposed a bill this week that would effectively ban TikTok in the United States… I don’t know for sure how this will end. I don’t have a ton of confidence whether it’s going to end with just an outright ban or whether it’ll be some sort of forced divestment. One interesting possibility is that a US company could bid for TikTok, the way that it sort of happened during the Trump administration with Oracle and Microsoft.
The media quits paying so much attention to Twitter — Hard Fork, New York Times
Casey Newton: My high-confidence prediction is that in 2023, the media’s divorce from Twitter will begin in earnest. And that to the extent that Twitter and the media are inextricably linked, that will be much less true at the end of 2023.
Twitter won’t lose users — After Hours, Felix Oberholzer-Gee
My prediction is that Twitter at the end of 2023 will have 200 million daily active users, the same number as today… Nothing is going to change… My intuition on this is guided by Craigslist. Craigslist has not done a thing since basically forever… And Craigslist has 200 million users visit each year… It has 50 employees… Twitter is the Craigslist of communication platforms.
Streaming wars
Less spending on original TV shows — analysts, via the Financial Times
A decade-long spending boom on original television shows is expected to slow to a crawl this year as lossmaking streaming platforms moderate rapidly expanding budgets and traditional channels cut back on commissions… Overall spending growth on original content is expected to fall from 6 per cent last year to just 2 per cent in 2023, according to research group Ampere Analysis. Excluding production shutdowns during the coronavirus pandemic, the rate of expansion is the lowest in more than a decade where total worldwide spending jumped from $128bn to $243bn.
Netflix and Spotify merge — After Hours, Felix Oberholzer-Gee
One of my predictions is that we will see some sort of a tie up between Spotify and Netflix… The reason why I think that is… Spotify is really inexpensive at this point in time… If you think about the Netflix side, where advertising used to be not even the beginning of a conversation — now they’re building this advertising business. You have two companies whose business models become more similar over time. Both companies that could use the marketing advantages, in particular first party data that arise from a tie-up or an acquisition. So everything says these two somehow have to find together, maybe it’s an acquisition and maybe it’s a little less than that.
Spotify gets acquired — After Hours, Youngme Moon
2023 will be the year Spotify is involved in some major M&A. And the reason I didn’t say Netflix is… just because of the antitrust difficulties in getting the deal done… Spotify is too mediocre a business to go it alone, it’s too attractive a business not to be a prime target of somebody else.
Venture capital & startups
A lot of startups will go under in the first half of 2023 — Fred Wilson, Union Square Ventures
there is a huge number of startups out there that have not really found product market fit, have not created positive unit economics, and have unresolved issues in their founding teams and leadership teams. These startups will struggle to raise capital at any price and most of them will fail. This has already started to happen but because so much capital was raised in 2021 and the early part of 2022, it has taken longer for these companies to fail. I think we will see a lot of startups in this category go under or taken out in fire sales in the first half of 2023.
Unicorns will lose value — Pitchbook
The Morningstar PitchBook US Unicorn Indexwill show a negative return from January 1, 2023 through December 31, 2023.
Fewer VC mega-rounds — Pitchbook
Outlook: 2023 US VC mega-round activity will fall below 400 deals, hitting a three-year low. Rationale: Mega-rounds, defined as rounds with deal sizes of $100 million or more, have become more prevalent in recent years with surplus capital and the high number of investors chasing VC deals… In the wake of the 2022 economic downturn, investors are presently focused on the capital efficiency, path to profitability, and justifiable valuations of startups. This shift in investor mentality, coupled with depressed public markets affecting late-stage deal metrics and comparables analysis, will thwart the mega-round activity in the coming year.
Lots of late-stage down rounds — Pitchbook
Series C and D rounds will see the most downrounds, as these companies are currently the most starved for capital… Depending on how long it takes for the
IPO window to open, we may see these companies cut operations significantly
to increase runway at the expense of short-term growth. If or when these
companies need additional capital from the private markets, many will have to
raise it at a reduced valuation.
AI startups riase $1b+ — Edith Yeung, Race Capital, via Axios
"Funding for generative AI and predictive computing startups will explode to over $1 billion." — Edith Yeung, Race Capital
More talent shifts into climate tech — Fred Wilson, Union Square Ventures
We are also seeing a noticeable movement of tech and startup talent into the climate sector in search of new problems to solve, more meaning in their work, and many more job openings too. I think 2023 will be a big year for this talent migration.