What will the U.S. economy look like in 2018?

See what forecasters predict

The U.S. economy is like an aircraft carrier or supertanker: Once it’s steaming in a certain direction, it takes a while to change course.

That suggests today’s momentum will continue in the coming year, even though the economic expansion already is the third-longest on record. Here are some predictions for 2018 focused around economic issues and investing:

A decent year for stocks

It will be difficult to top the market’s performance in 2017, in terms of smooth, reliable appreciation. Stocks, as represented by the 500 companies in the Standard & Poor’s 500 index, gained ground steadily, without suffering any major downdrafts. Returns in 2018 won’t be so consistent and might not be as lofty, but the advance could continue.

Stocks aren’t cheap. Valuation measures such as price-earnings ratios are flashing caution. But profitability has been rising, spurred by economic growth around the globe. The pending tax-reform legislation in Congress should help.

Tax reform “will have a big impact on corporate profitability ... all of it positive,” wrote Sheraz Mian, research director at Zacks Investment Research. Profits for S&P 500 companies already are expected to rise around 11.7 percent in 2018, he said. Lower corporate tax rates could push that higher.

One concern is that investors could grow more reckless and greedy. Speculation has built for assets such as Bitcoin. That fervor could spill over into stocks and other investments, through forecasters at financial-giant BlackRock see few signs of the euphoria that preceded the stock-market crashes of 2000 and 2008.

A patchy time for real estate

Tax reform could be modestly negative for housing, especially as the mortgage-interest and property-tax deductions will be scaled back a bit.But the economic underpinnings remain good, including benign interest rates and steady hiring that has pushed down unemployment.

In fact, jobless rates throughout the world’s largest economies are approaching their lowest levels in half a century, noted Douglas Porter, chief economist at BMO Capital Markets.

But while affordability remains favorable, real estate is highly dependent on local factors. Good-paying jobs, for example, are lacking in certain parts of the nation, while homes are much less affordable in California and other coastal hotbeds.

More corporate shenanigans

Amid the mostly sluggish economic recovery of the past eight years, top corporations have risen to the occasion by strengthening their balance sheets, cutting costs where necessary and otherwise exercising financial prudence. But with profits now rising and with corporate income-tax rates likely to drop owing to tax reform, companies might ease up on their discipline.

Don’t be surprised to see corporations announce ambitious expansion plans, embark in the direction of new products or services, or gobble up other companies in acquisitions. Some such moves will bear fruit, but others won’t.

For companies that could bring back or repatriate millions if not billions of dollars from overseas subsidiaries, thanks to lower corporate tax rates, the pressure will be on management teams to handle the windfall wisely. Other uses of this cash might include hiring more staff, buying back shares and raising dividends.

A wider rich-poor gap

Some corporations will use their extra cash to raise employee pay and compensate top executives even more generously.

Executive pay depends largely on profitability and stock-market gains, which explains why payouts have risen in recent years — and could jump in 2018. CEOs who bring home tens of millions of dollars a year are among the most striking example of the nation’s richpoor divide.

Nationally, executive pay among larger companies in the S&P 500 rose 8.5 percent last year to an average $11.5 million, according to a study by Equilar and the Associated Press.

A simpler year

Tax reform should make the annual ritual of filing federal income tax returns much easier for a lot of people. That will start in earnest with 2018 returns filed in early 2019, though many people are already starting to plan ahead, and paycheck-withholding rates will adjust early next year.