What Sectors Would Benefit The Most From A Robust Economic Recovery?

Upon further review the US economic recovery may not be as tepid as originally thought. The US economy added over 162,000 jobs and GDP expanded 5.6% last quarter. Even the stock market is pricing in a robust economic recovery. If so, these are the sectors that should benefit the most.

Retail Sector

The viability of any economic recovery will be judged by the health of the American consumer. The American economy is built on consumer spending. As the consumers feel wealthier and more secure about their employment, consumer discretionary spending will rise. No sector stands to benefit more from a healthy consumer than the retail sector.

Steel Sector

The steel industry is a direct beneficiary of the recent surge in industrial production. Demand appears to be returning to the steel sector and not just for replenishing inventory. Pricing power has returned to the steel sector as steel prices have risen three times this year. The return of CAPEX spending will benefit the entire basic materials industry as companies expand capital expenditure budgets.

Tech Sector

The tech sector held up well during the economic recession and has outperformed since the start of the recovery. IT budgets were slashed during 2008 and 2009. As business growth returns, companies will increase IT spending. Large companies are restarting IT spending programs. IDC estimates that retail spending for small and medium sized companies will grow 5.5% over the next 5 years.

Energy Sector

Growth in the industrial sector will increase the demand for energy resources.  Manufacturing plants reopening and employment numbers improving are both good news for crude oil prices and utilities.  

Photo by: Speaker Pelosi