From fading retail establishments to the surging stock market, 2017 is sure to be a year remembered for both shattering molds and vanishing institutions.
The curtain of silence that long obscured sexual harassment in the workplace fell with a stupendous roar. Newfound currencies tore through benchmarks considered insurmountable not long ago. A new tax plan promised to save business bundles, and a new administration vowed to unshackle businesses from the constraints of heavy regulation.
Oh, and there’s Amazon. What would 2017 have been without Amazon’s continued domination of pretty much everything?
This year, the biggest business surprises included unprecedented feats, previously unreported allegations and plenty of unbelievable scandals. But take pause, because those same headlines can offer a sneak peak of what to expect in the coming new year.
Take a dive into our time capsule highlighting the top 10 business surprises of 2017:
- Deregulation Surpassed Promise
Even before he took office in January, President Trump vowed to reduce federal regulations to 1960 levels, relieving American business from the burden of countless restrictions.
“We’re here today for one single reason: to cut the red tape of regulation,” Trump said, explaining “the never-ending growth of red tape in America has come to a sudden, screeching and beautiful halt.”
By amending and removing regulations that are ineffective, repetitive and obsolete, Trump plans to promote economic growth and innovation. Fulfilling promises to review and assess existing regulations, the administration’s agenda includes the withdrawal and reconsideration of numerous regulatory actions, plus new deregulatory actions. And Trump wasted no time getting the task done.
Trump promised to eliminate two regulations for every one added, but he shocked even his strongest supporters by removing more than 22 times as many regulations from the books as were added. The administration eliminated 67 regulations and proposed just three new rules between the time Trump took the oath of office and the end of fiscal 2017, according to the White House’s Unified Agenda of Regulatory and Deregulatory Actions.
Much of the deregulation dealt specifically with rules designed to protect and preserve natural resources. Trump even kept a major campaign promise when he pulled the United States out of the 2015 Paris climate accord. While the official withdrawal won’t take place until 2020, the policy shift affirmed the administration’s “America First” agenda.
While the deregulation was a campaign promise in 2016, few expected the speed and volume the actions would take place. American businesses can expect much of the same in 2018. Federal agencies still plan to finalize three deregulatory actions for every new regulatory action in 2018’s fiscal year. Plus, 2018 is likely to see another heavy push to repeal as many regulations as possible before midterm elections roll around.
- We Are Still In
As part of his move toward business deregulation, Trump pulled the U.S. out of the Paris climate accord, the hard-won global agreement to tackle the greatest threat to humanity and the economy, becoming the only country in the world on the sidelines. That was expected, but many were surprised at just how quickly American business fought back. Major companies across the economy began urging the administration to keep the United States in the Paris Agreement on climate change for the good of the U.S. economy.
And while the president claims his action are to support U.S. business interests, on the day his announcement about the Paris climate accord, 25 multinational companies — including conglomerates such as Apple, Facebook, Google, HPE, Ingersoll Rand, Intel, Microsoft, PG&E, Tiffany, and Unilever — ran a full page ad in the Wall Street Journal requesting Trump’s continued commitment to the agreement. By that weekend, dozens of big companies declared, We Are Still In.
In fact, during May and June, full-page advertisements in The New York Times, The Wall Street Journal, and New York Post, where companies told the president continued U.S. participation in the agreement will help manage rising climate risks and compete in growing global clean energy markets. Can we expect the policy to change in 2018? Based on the administration’s response, no.
- TransPacific Partnership Survival
Trump formally withdrew the United States from the Trans-Pacific Partnership trade deal on his first day in office, weakening important ties between America and its Asian allies amidst China’s rising influence around the Pacific rim. Twelve countries that border the Pacific Ocean – representing about 40 percent of the world’s economic output — signed up to the TPP in February 2016.
Trump’s withdrawal from the pact was no surprise, but what happened later certainly was. Against all odds, Japan managed in 2017 to keep the Trans-Pacific Partnership alive after the withdrawal of the United States. Tokyo convinced the 10 other nations to rejoin the pact. But Canada issued a last-minute request to revise the treaty. It’s still possible Japan and the nine other members could continue without Canada in 2018. Either way we haven’t yet witnessed the demise of the TPP.
- Stock Market’s Record-Breaking Climb
The stock markets surged all year without any true setbacks. Trump predicted the stock victory upon his election, but the longevity of the climbs exceeded expectations.
The S&P 500 hasn’t even suffered a 3 percent pullback since prior to 2016’s presidential election – its longest stretch on record. The S&P 500 Index has risen 20 percent over the course of the year, and the Dow Jones Industrial Average is up 25 percent – its best annual performance since 2013.
Meanwhile, the Nasdaq outperformed both, with surge of almost 30 percent – even more evidence of investors’ excitement over the strengthening economy and record corporate profits bolstered by the GOP’s successful plan to slash corporate taxes.
While investors enjoyed “exceptional returns” in 2017, Morgan Stanley warned in a recently reported that “such calm is likely to wane in 2018” as earnings growth reaches its peak. The firm even warned the United States has reached a “late cycle environment” that will “eventually turn into a recession.” Will adding a stimulus to an already-healthy economy hold unintended consequences in 2018? The answer will prove pivotal in the years to come.
- Electric Vehicles Turned a Corner
Industry insiders are calling 2017 the year the electric car finally arrived in a realistic capacity. Major auto players from around the world announced plans to replace internal combustion engines with all-electric and hybrid systems, finally beginning down the path to a world filled with battery-powered cars and their lower emissions.
Tesla’s highly-anticipated Model 3 garnered the most attention as Elon Musk’s all-electric automaker finally brought a relatively affordable sedan to market. Meanwhile the Chevy Bolt outsold all of Tesla’s models domestically in October.
In 2018, electric cars will finally become a viable option for America’s families, turning a vital corner toward the total electrification of America’s roads. Electric cars might only account for less than 2 percent of all U.S. auto sales, but in 2018 the important numbers to watch are price, driving range and availability – features that will determine the future of the market.
- Amazon Quakes Retail
If any one company dominated 2017, it was retail-giant Amazon. The company’s annual sales now exceed $100 billion, and its stock price is up more than 300 percent over the past five years. It’s already entered into nearly every retail-related sphere, and a bold move in 2017 only further catapulted Amazon into the corporate stratosphere. With its $13.7 billion acquisition of Whole Foods, Amazon has finally cemented its footprint in the grocery industry and become an even bigger competitor to Walmart.
The purchase didn’t end Amazon’s landmark year, either. The company also announced it was seeking proposals for where to build a second headquarters, and what seemed like every American city scrambled to make the winning proposal, offering land, tax breaks, free sandwiches — even naming rights to an entire city.
Amazon’s impact has been felt heavily in the retail industry. In January, the nonprofit Institute for Local Self-Reliance conducted a survey of nearly 3,000 independent businesses, half of them retailers, asking them to cite their biggest threats. Competition from Amazon ranked far above more modest concerns such as competition from chains and big-box stores, health care, finding employees, and rising rents. And those concerns are not without merit. By some counts, 8,000 stores run by national chains closed their doors in 2017. But Amazon isn’t out to shutter brick-and-mortar stores.
The online giant is now partnering with a number of brands, including Kohl’s, which is testing handling Amazon returns at 82 stores, and Nike has started selling a small assortment of its merchandise directly via Amazon. Even Calvin Klein decided to bypass department stores and go straight to Amazon for some of its new merchandise this year. Consumers can expect more from Amazon in 2018, as well as even more competitors looking for ways to partner.
- Equifax Hacks Endangered Americans
One hack after another was revealed in 2017, each seemingly worse than the previous. Cybercriminals breached Equifax, one of the nation’s three largest credit bureaus, and stole the personal data of 145 million people. Considered one of the worst data breaches of all time, the company only revealed the hack two months after it took place. But because of the sensitive – and useful – nature of the stolen data, the hack’s impact is likely to be felt for years to come.
According to the New York Times, the Equifax breach involved the names, Social Security numbers, birthdates and addresses as many as 145.5 million people, more than 200,000 credit-card numbers and “some smaller number of driver’s license numbers.”
The Equifax hack may ultimately change consumer behavior, proving once and for all that Social Security numbers and birthdays might not be the best form of secure identification. Lawmakers are also proposing legislation to combat similar data breaches. In the meantime, businesses and people are finally adequately aware of their digital security risks, even if they never themselves access the Internet.
- Sexual Harassment Finally Addressed
In October, the world was shocked when the New York Times published allegations of sexual harassment and assault against Hollywood producer Harvey Weinstein. And since then, more than 40 high-profile men in media, politics and other industries have faced allegations ranging from inappropriate behavior to rape. The controversy has sparked the biggest national conversation on sexual harassment since the Anita Hill-Clarence Thomas hearings televised in the early ’90s. And that conversation has left its impression on the year, from companies taking a second look at their sexual harassment policies to the tide of #MeToo stories flooding social media.
At long last, in 2017 a majority of Americans – 64 percent, in fact – say sexual harassment is a serious problem, up from 47 percent in 2011, according to a recent Washington Post-ABC News poll. And for the first time, men are being ousted from their jobs by women choosing to bypass the legal system and – armed with screenshots, diary entries and the testimony of friends and family – aim instead for the court of public opinion. The American workplace is finally starting to seriously deal with the longstanding issue of sexual harassment, and the trend is bound to only accelerate in 2018.
- Bitcoin Took a Roller Coaster Ride
What some have called a meteoric rise, Bitcoin’s 2017 value was more akin to a roller-coaster ride. The initial price of bitcoin, set in 2010, was less than 1 cent. In January it was just over $900, and by December it reached a record high above $19,800 before again collapsing, losing a third of its value in a single day and sinking to below $11,000 before regaining some of the ground it lost. It jumped to almost $16,000 before falling again to just over $14,000, according to Coinbase.
The 2017 price surge may be a bubble. It could also be a sign that cryptocurrency is finally ready to go mainstream as the number of cryptocurrencies and tokens multiply into the thousands. And while cryptocurrency entrepreneur Julian Hosp says bitcoin’s meteoric climb isn’t yet done, he sees a longer roller-coaster ride ahead.
“I think we’re going to see bitcoin hitting the $60,000 mark, but I also think we’re going to see bitcoin hitting the $5,000 mark,” Hosp, co-founder and president of TenX, told CNBC.
- Corporate Tax Cuts Exceeded Expectations
Congress passed a major overhaul of U.S. tax law in 2017. Under the law, aimed at providing relief to big business and further stimulate the economy, corporations will get a permanent tax cut of 14 percentage points, its lowest level since 1939.
On December 22, Trump signed the Tax Cuts and Jobs Act, which reduced the corporate tax rate from 35 percent to 21 percent beginning in 2018. The act also raises the standard deduction for pass-through businesses – including sole proprietorships, partnerships, limited liability companies, and S corporations – to 20 percent.
The new tax law also promotes a transition from the current “worldwide” tax system to a “territorial” system. Under the worldwide system, multinationals are taxed on foreign earned income, so they don’t actually pay the tax until they bring the profits home. Many corporations, therefore, leave their accounts overseas.
Under the territorial system, businesses aren’t taxed on that foreign profit, so they are more likely to reinvest it in the United States. Under the act, companies can repatriate $2.6 trillion held in foreign cash stockpiles and only pay a one-time tax rate of 15.5 percent on cash and 8 percent on equipment.
Will the tax incentives push more companies to hire more Americans? Stay tuned in 2018 to find out.