10 and a new administration vowed to unshackle businesses

10
Biggest Surprises in 2017 Business — And What They Mean for 2018

 

From
fading retail establishments to the surging stock market, 2017 is sure to be a
year remembered for both shattering molds and vanishing institutions.

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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:

1.      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, adding that “the never-ending
growth of red tape in America has come to a sudden, screeching and beautiful
halt.”

 

By amending and eliminating regulations
that are ineffective, repetitive and obsolete, Trump plans to promote economic
growth and innovation. Fulfilling longstanding promises to review and assess
existing regulations, the administration’s agenda includes the withdrawal and
reconsideration of numerous regulatory actions, as well as newly anticipated
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 2017,
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. Agencies plan
to finalize three
deregulatory actions for every new regulatory action in FY2018. Plus, 2018
is likely to see another heavy push
to repeal as many regulations as possible before midterm elections roll
around.

 

 

2.      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
multinationals — 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 asking Trump to stay
committed 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.

 

 

3.      TransPacific
Partnership Survival

Trump formally withdrew the United States
from the Trans-Pacific
Partnership trade deal on his first day in office, distancing America from
its Asian allies and China’s rising influence in the region. 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.

 

 

4.      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 recent report that “such
calm is likely to wane in 2018” as earnings growth peaks. A critical
question for 2018 is whether adding stimulus to an already-healthy
economy will have unintended consequences.

 

 

5.      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 all corners of the industry announced
their plans to replace internal combustion engines with all-electric and
hybrid systems, laying the groundwork for a world filled with battery-powered
cars and the lower vehicle emission levels that come with them. 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.
Next year will mark a turning point in the ultimate electrification of
America’s roads. Electric cars still only account for less than 2
percent of all U.S. auto sales, according Navigant Research. But, for EVs, the
important numbers to watch are price, driving range and availability – features
that will determine the future of the market.

 

 

6.      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.

 

 

7.      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 of up to 145.5 million
people, credit card numbers for more than 200,000 people and even a 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.

 

 

8.      Sexual
Harassment Finally Addressed

In October,
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.

 

 

9.      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 rapid rise isn’t over yet, 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.

 

 

10.  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 to 20 percent for pass-through businesses, including sole
proprietorships, partnerships, limited liability companies, and S
corporations.

 

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.