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. ||||| The central bank predicted that the economy would expand 2.5 percent to 2.9 percent in 2012, well below its June projection of 3.3 percent to 3.7 percent. For the following year, 2013, the Fed predicted growth of 3 percent to 3.5 percent, down from a range of 3.5 percent to 4.2 percent. 
 
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 The unemployment rate, it predicted, would still be at least 8.5 percent at the end of 2012, at least 7.8 percent at the end of 2013 and at least 6.8 percent at the end of 2014. Such reductions probably would come in part from people abandoning the search for work, rather than those finding new jobs. 
 
 The unemployment rate was 9.1 percent in September. The government will release October figures on Friday. 
 
 This is a difficult time for the Fed and its chairman. Republicans charge that the central bank’s existing efforts have gone too far, sowing future inflation. Democrats say that in hesitating to do more, the Fed is ignoring the plight of more than 25 million Americans who cannot find full-time work. And the sluggish pace of growth, which continues to fall short of the Fed’s predictions, is a bright marker of its failure to stimulate a recovery. 
 
 Mr. Bernanke on Wednesday sought to argue that the Fed was trying to get things just right in maintaining a delicate but necessary balance between competing concerns about inflation and unemployment. He said that Republican critics were ignoring the Fed’s record. Five years into the crisis, there is no sign of inflation. 
 
 “The area where we have fallen short obviously is on the unemployment side,” he said. “So I think that criticisms based on the concern about inflation have so far at least not proved to be very valid.” 
 
 But Mr. Bernanke also gave little satisfaction to liberal critics. This meeting tested what the Fed was willing to do when the economy was merely muddling along, and the answer that came back: Nothing new. Asked several times why the Fed had paused if jobs are a problem and inflation is not, Mr. Bernanke offered a description but not an explanation: The Fed is willing and able to do more, he said, just not right now. 
 
 The Fed’s economic forecasts do not have a particularly good track record, but since they are based on individual forecasts submitted by the 17 members of the Federal Open Market Committee, the Fed’s policy-making board, the numbers do offer a window into the state of their minds. In a word: glum. 
 
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 The Fed’s assessment of the economy was slightly brighter than after the last meeting in September. The committee’s statement noted that growth has “strengthened somewhat” since summer thanks in part to increased consumer spending. But there is still a hole in the economy where housing used to be, and the unfolding financial crisis in Europe continues to shadow the domestic economy. The statement again noted “significant downside risks to the economic outlook, including strains in global financial markets.” 
 
 Still, the decision to pause won the support of nine of the 10 voting members of the committee. The one dissent came from Charles Evans, the president of the Federal Reserve Bank of Chicago, whose vote echoed his recent speeches in which he has criticized the Fed for caring more about inflation than unemployment. It was the first time since 2007 that a board member had dissented in favor of doing more. 
 
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 The limiting factor appears to be inflation. The Fed projects — as do financial markets — that prices and wages will rise about 2 percent a year, the level that the Fed considers healthy. Mr. Evans and outside critics want the Fed to trade a higher rate of inflation for reductions in unemployment. But Mr. Bernanke and a majority of his colleagues believe that this would unsettle the dearly bought belief that the Fed will keep inflation slow and steady. 
 
 The pressure to reconsider that stance has been eased by recent data, including the estimate that growth rose to an annual pace of 2.5 percent in the third quarter. There is also the question of what Congress will do: Further cuts in spending, or a decision to end the payroll tax holiday, would strengthen the case for the Fed to start new aid programs. A plan to pay down the debt would have the opposite effect. 
 
 These considerations have suspended for now any movement toward a new round of stimulus, like the proposal by the Fed Governor Daniel K. Tarullo that the Fed should resume buying large quantities of mortgage-backed securities to reduce the cost of mortgage loans, increasing demand for housing. 
 
 “While I do not shirk the responsibility of the Fed having to do what it can to meet its mandate, obviously a broad range of policies can affect growth and employment,” Mr. Bernanke said. “I hope that there will be a range of actions that will complement and supplement the Federal Reserve’s efforts.” 
 
 Mr. Bernanke indicated that the Fed does plan to expand in the near future the information that it provides about its outlook and policies. Such information can increase the power of those policies. For example, convincing investors that the Fed intends to maintain interest rates near zero for a longer period will tend to drive down rates on long-term loans — which are set in large part based on expectations about future short-term rates — thereby reducing the cost of borrowing for businesses and consumers. 
 
 A simple change would involve publishing the Fed’s predictions for the future level of the short-term interest rates, which it controls directly and has already said that it plans to hold near zero through mid-2013. 
 
 Diane Swonk, an economist at Mesirow Financial in Chicago, said the Fed could show greater concern for job creation by tying such a forecast to the unemployment rate, announcing that it would keep short-term rates near zero until unemployment dropped below 7 percent, provided that inflation remained under control. 
 
 “This is how you would move toward it,” Ms. Swonk said, referring to Mr. Bernanke’s mention of the issue during his news conference. “And I think that that is exactly where they are heading.”
– 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.