Tom Ellsworth's 10 Bold Predictions for 2026: AI, Rates, Housing, and More

AI Growth and ROI

• ⚡ AI growth is predicted to slow in 2026 due to a power bottleneck, stemming from the high demand for data centers and the difficulty in obtaining permits and securing sufficient energy supply.
• 💡 Beyond growth, the focus will shift to the Return on Investment (ROI) for AI implementation, with corporate boards demanding tangible results rather than just adoption of a "shiny object."

Labor Market Adjustments

• ⚠️ The labor market is expected to face significant adjustment and calibration, driven by automation in sectors like warehousing (robots) and transportation (autonomous trucks).
• 🧩 A key challenge will be reskilling the workforce to meet new demands, leading to geographic surpluses and shortages of labor with the wrong skills in the wrong places.

Federal Reserve and Interest Rates

• 📉 A new Fed chair, potentially more aligned with a different political leaning, is expected to respond to labor market challenges with two rate cuts before June 15th, 2026.
• 🏦 Despite rate cuts, interest rates are not expected to fully resolve issues for businesses with weak balance sheets, with 30-year fixed mortgages likely hovering around 5.75% for those not paying points.

Housing Market and S&P 500

• 📈 National housing prices are predicted to remain flat to 1% up due to balanced demand and supply, though specific regions like the Florida Gulf Coast may see decreases of up to 10% due to hurricane impacts and insurance costs.
• 📊 The S&P 500 is projected to reach 7600 by the end of 2026, representing about a 10% increase, with headwinds from labor markets and interest rates, and a shift from the "Magnificent 7" to a "Magnificent 5."

Electric Vehicles and Media Landscape

• 🚗 The EV market will undergo a shakeout, with hybrid vehicles making a comeback due to consumer concerns about charging infrastructure, battery life, and refueling times.
• 🔌 Significant investment is expected in charging networks and battery technology, but EV makers will face headwinds, while hybrids offer a more practical alternative for many consumers.
• 📺 The media industry will grapple with a "post-sale reality" following potential mergers (e.g., WBD), leading to the decline of legacy linear cable channels and a greater focus on individual personalities, podcasts, and standalone series.
• 🎙️ Podcasts will continue to be media "shiny objects," but legacy media companies attempting to consolidate them into linear-style formats may fail, while independent podcasts will face their own challenges.