Looking Back at 2012
Forecasting hits and misses from The Kiplinger Letter.
Forecasting is a tricky business in which a perfect record is unattainable. But the editors of The Kiplinger Letter strive to be as accurate as possible, because we know our readers base decisions on what we say every week.
And we keep score, looking back at the end of each year to see how we did. We hit some home runs this time around, but we struck out a few times, too.
Here are our biggest hits and misses for 2012, starting with some forecasts that we nailed:
Politics. We gave President Obama an edge throughout the election season. Our first call, in "The Year Ahead" special edition published in December 2011, noted that he would "benefit from the fact that while job creation and the economy overall are tepid, they're moving in the right direction." More than 10 months later, just days before the election, we wrote, "A bitterly split nation seems set to elect Barack Obama over Mitt Romney." On Election Day, Obama comfortably won a second term.
On Jan. 6, before the first primaries were held, we were bullish about Romney's chances of being the Republican standard-bearer, writing that "no one can keep him from the nomination." Along the way, as one candidate after the other won some states and briefly claimed the front-runner's mantle, we noted repeatedly that Romney was the only candidate with the money and organization to survive a prolonged fight. And in the end, he won easily.
House and Senate calls were also on the mark. On Feb. 3, our forecast had Republicans losing seats in the House but staying in control. When new lawmakers are sworn in next year, there will be eight fewer Republicans, but the GOP still has a comfortable 234-201 advantage.
We were slower with the Senate, noting throughout the year that control could go either way. But it wasn’t until Nov. 2, just four days before the election, that we were comfortable in saying Democrats would retain the majority in the upper chamber.
Economy. We correctly told readers early in the year that inflation would be tame and that long-term interest rates would stay low for all of 2012. We pegged inflation at 2%. Through November, inflation was actually 1.8%, down from 3% in 2011. And we said that the rate on 10-year Treasuries would be "stuck near 2%." The yield is actually 1.8%
In the Feb. 3 Letter, we noted that further easing by the Federal Reserve couldn't be ruled out, even though rates were low. The Fed announced another round of buying mortgage debt in September.
Our read on Europe's economy was also on target. An item in the Feb. 3 Letter said that Europe was headed for recession. It started in the second quarter of the year.
Health Care. In late December 2011, the Letter noted: "Unusual allies may help Obama win the Supreme Court health law case." Then we went even further: "Don't be thrown for a loop if the high court upholds the individual mandate." In late June the Court did uphold the mandate, with one of the "unusual allies" we sited -- Chief Justice John Roberts -- casting the deciding vote.
Energy. We advised readers on Jan. 13 not to expect President Obama to issue a verdict on the controversial Keystone pipeline by Feb. 21, as many thought a law required him to do. The Kiplinger Letter noted that though the law was often portrayed as an ultimatum requiring a clear yes or no on the long-delayed oil route by that date, it wasn't. We wrote that the law called for Obama only to OK the pipeline or explain why he wasn't ready to do so.
We forecast, correctly, that the president would delay till after the November election. He announced his decision a few days after winning a new term.
Education. We forecast on July 22 that free online education offered by universities would be the answer to employers' need for more skilled labor. These free online courses have taken major steps toward credibility in line with our forecast, which also noted that credentialing methods were in the works. In November, the American Council on Education announced that they would assess free online courses, specifically mentioning Coursera, the educational technology firm, which offers 200 courses from 33 universities.
In September, Udacity announced that Colorado State University's Global Campus would accept transfer credits for Udacity's "Introduction to Computer Science." And in October, Udacity announced that it was partnering with big tech firms such as Google, Microsoft and Nvidia to offer a new set of free online courses to teach skills relevant to high-tech jobs.
Tech. On Aug. 12 we noted that the demand for more-secure log-ins, especially given the ubiquity of smart phones, would bring about two-step verification procedures that would require an initial password and then another -- a one-time-use code sent to your mobile phone. After the forecast was published, Dropbox, the file hosting service, announced two-step verification for its 100 million members. In December, Stripe, the online payment service, similarly announced two-step verification. Look for other companies to follow.
On Sept. 21, we wrote that wireless charging stations would be coming soon to airports, hotels and restaurants. Such stations aren' widespread yet, but they will be. In October, AT&T, Google and Starbucks joined the Power Matters Alliance, a standardization organization for wireless power. Also in October, hundreds of wireless power mats were installed in Madison Square Garden in New York. And Starbucks has plans to test charging mats in 17 of its stores in Boston.
Advertising. We wrote on Jan. 27 that 2012 would mark a first for online advertising: Spending on Internet ads would surpass print. We forecast that total online ad spending "will hit $40 billion in 2012...as print outlays slump to $34 billion," down from $36 billion in 2011.
As the year drew to a close, digital ad spending stood at more than $37 billion; print at around $34.5 billion. Digital ad spending will continue to grow. Globally, it will surpass print spending by 2016.
Agribusiness. At the beginning of the drought-plagued year for farming, we forecast that farmers would plant 96 million acres of corn and 76 million acres of soybeans. According to the U.S. Department of Agriculture's year-end tally, the totals were 96.9 million acres and 77.2 million acres, respectively.
The National Hockey League. Before the 2012-2013 season was supposed to start, we wrote that many businesses in 30 U.S. and Canadian cities were bracing for the worst: the likelihood of no NHL games this season. In late December, the owners' lockout continued, with little hope of a solution anytime soon.
Among our clunkers in 2012:
--The unemployment rate surprised us. We wrote on Jan. 6 that 2 million new jobs would be created, and said that the jobless rate would "wind up slightly below the current 8.5%." About 1.8 million jobs will be created -- close to our forecast -- but in November, the most recent report, unemployment stood at 7.7%.
--We noted that the only long-term bill Congress would pass during the year was legislation addressing the nation's transportation infrastructure. It passed a short-term measure instead, leaving many needy projects to go wanting.
--We wrote that the odds weighed heavily against Venezuelan leader Hugo Chavez, noting that he was a good bet to be defeated or succumb to cancer in 2012. Chavez won reelection by a wider margin than many expected, and though it's said his cancer is terminal, he remains in office.
--On the eve of 2012, we wrote that strong global demand should keep coal prices firm. They fell.
--And we were off target in forecasting that Florida Sen. Marco Rubio was the front-runner to become Romney's vice presidential candidate. On April 6, for example, we wrote that odds favored Rubio, though we did include the eventual choice, Rep. Paul Ryan of Wisconsin, on the short list of four contenders. And we were ahead of the pack in reporting on June 22 that Rubio wouldn't be Romney's pick, even as Romney was saying publicly that the Floridian was still under consideration.