Economists Expect a Strong 2017, with Oil & Gas Services, Digital Advertising and Pet Grooming & Boarding Among the Top Industries Poised for Growth
Despite the attention that November’s presidential election garnered, and particularly the differing economic approaches of each candidate, economists Brian Beaulieu and Dr. Alan Beaulieu of ITR Economics stated during a recent presentation that the election results had little bearing on their overall macroeconomic outlook. During their “Economic Insights for the New Year and Beyond” presentation, the two economists shared their viewpoint that “things are good… [and that] the global economy is getting strong and will rise into 2018.” They cited several key indicators to support this assertion, namely:
- U.S. GDP and industrial production rates of change are improving
- Oil rig count is increasing
- Personal savings are rising
- Wages should rise (demand is up, and supply is decreasing)
- Stocks (and profitability) are headed up, and are not yet at overvalued levels
However, according to both Beaulieu brothers, the four percent GDP growth rate that President Trump promised to help the U.S. achieve during his election run will be very hard to achieve. The two main reasons they cited were that the U.S. economy is larger than ever before (and therefore harder to move) and that baby boomer business owners are closer to retirement and therefore are becoming more risk averse with their business growth initiatives. Current rates of growth stand at 1.6% for U.S. GDP and 1.9% for U.S. Services. And while four percent growth rates may not be likely in the near horizon, ITR still sees a three percent range as a great time to be active and engaged in business growth efforts.
The Beaulieu brothers also pointed out that even though a lot of attention has been given in recent years to U.S. companies taking their operations offshore, U.S. Total Foreign Direct Investment has been up over the past two years, and has seen fewer than ten negative months over the past 20-plus years (which represents a span of over 240 months). Although the rate of change for U.S. exports is still negative, at -5.7%, it is now ticking up. 59.9% of the United States’ export base is made up of manufactured goods.
As forecasted in 2015, ITR still foresees a mild, manageable recession in the first half of 2019, and a significant depression in 2029 or 2030. ITR cites long-term indicators that point to these future setbacks.
Industries Poised for 2017 Growth
According to research from IBISWorld, several industries and niche markets are well-positioned for strong 2017 growth. We’ve highlighted five of these industries below.
Cementing Oil & Gas Well Services
The Cementing Oil and Gas Well Services segment arguably suffered the most during the recent Oil & Gas downturn, “peaking at $3.7 billion in 2013, before plummeting 64.6% in 2015 and an additional 41.1% in 2016.” However, with rig counts increasing by more than 45% over the past six months, demand is expected to grow, and the industry is expected to rebound by 62% in 2017.
Digital Advertising Agencies
Internet traffic is steadily increasing, and more and more digital advertising opportunities have opened through video streaming sites like Hulu. With users now customizing their ad preferences and mobile-driven location tracking services equipping advertisers with valuable data, this industry is expected to keep rising.
Pet Grooming & Boarding
Pet grooming & boarding revenue is anticipated to rise rapidly in 2017 due strong growth in the number of pets per household (measured as cats and dogs) and per capita disposable income. Rising per capita disposable income benefits this space in particular since owners have more money to spend on their pets, especially for luxury services. IBISWorld expects a revenue growth rate of 9.2% in 2017.
As housing starts have recovered, the revenue for carpenters has greatly improved over the past five years, and many of the losses incurred during the recession now have been recouped. With new housing starts forecasted to grow by 6.7% in 2017, this field should grow accordingly.
Although the Affordable Care Act, which the IBISWorld article cites as a driver for increased access to healthcare insurance coverage, may soon see major changes or an outright repeal, this industry still has demographic trends on its side. Adults are reaching the age of 65 at an annualized rate of 3.1%, making the U.S. population older now than it has ever been. “Over the past five years, the industry has benefited from an aging baby boomer population, many of which have more complicated, chronic conditions, which require multiple treatments and medications,” the article states.
For more industry-specific insights and outlooks, please refer to SDR’s quarterly industry reports.