Two words apply well for the year just ended: Whoa, Nelly! With the financial markets in chaos, the jobs landscape littered with layoffs, and the most audacious outpouring of federal funds since the Great Depression, most of us are ready to look forward to cheerier times in 2009.
Here at BusinessWeek, we’ve again donned our prognostication helmets and took a gander into the old crystal ball for a few (educated?) guesses at what this new year holds in store. True, we failed to predict the two major events of 2008 — the election of Barack Obama and the financial meltdown rippling across the world economy. But we did nail one call: 2008 was the year of $100-per-barrel oil — we just didn’t anticipate its stunning slide back to $40.
Recession Reigns
Expect more budget cuts, layoffs, shutdowns, bankruptcies, and mergers. Look for beleaguered bookseller Borders Group to slip into Chapter 11, and for Barnes & Noble to take over some of those stores — but only a few. Also expect Chrysler to merge into General Motors at a bargain-basement price as Chrysler’s private equity owners at Cerberus Capital race to get that investment off their books. With the rapid collapse of oil prices, and the resulting financial pressures, expect two or more mergers among Big Oil. Our best guess? Royal Dutch Shell buys troubled BP, in part to avoid regulatory issues that could come from merging with a U.S. oil company. There will also be tremendous pressure on wireless phone prices, causing financial headaches for companies like AT&T. Newspaper companies’ profits will continue to shrink; watch for a billionaire such as financier George Soros or New York Mayor Michael Bloomberg to lead a rescue of The New York Times, which will become part of a not-for-profit corporation by the end of the year.
Bernanke:…