Where The Real Recovery Is

Callum is a member of The Motley Fool Blog Network -- entries represent the personal opinion of the blogger and are not formally edited.

Historically, the US rebounds out of recessions at an annual growth rate of 4-6%, but we can barely touched 2%. People are bearish on the future of America; with 53.5% of US citizens seeing America heading down the wrong direction, according to RealClearPolitics poll of polls. The news is constantly jabbering on about the Fiscal Cliff, repeating the same talking points over and over again. Numerous numbers point towards the US heading back towards stagnant growth, if not a recession. If the US economy is growing at 2.7% (the latest number out) and if we go over the fiscal cliff the Congressional Budget Office said: "(u)nless lawmakers act, the economy is likely to contract in the first half of 2013 at an annualized rate of 1.3 percent, the CBO said, before returning to 2.3 percent growth later in the year." This would certainly hurt the stock market, causing a 20-30% plunge in the S&P 500. But instead of short selling the entire market, or staying out completely, one should look at the areas where the economy is growing.

In The Health Care Industry

Right now in the US 17.9% of our GDP is from the healthcare industry, and that is expected to rise to 20% by 2021. Right now, the US spends $2.6 trillion on the healthcare industry, and by 2014 that will hit $3 trillion, according to Centers for Medicare and Medicaid Services. People need to live and need to keep buying their drugs and going to the hospital regardless of GDP growth. HCA Holdings (NYSE: HCA) has seen its revenue stream grow by 11.08% this year as more people are able to pay the hospital bill because of the insurance mandate in Obamacare. It appears that the health care industry is easily riding out the global slowdown and will continue to see strong growth going forward. Hospital stocks like HCA and Tenet Healthcare (NYSE: THC) will benefit both from increased amounts of healthcare spending and more people having health insurance, so they can pay their hospital bills without HCA or THC having to eat the losses. Tenet's revenue is up 5.76% so far this year.

The Telecommunications Industry

Sprint Nextel (NYSE: S), Verizon Communications (NYSE: VZ), and AT&T (NYSE: T) make 90% more revenue off of customers with smartphones than those without one. With about half the mobile phone using population with a smartphone, there still is a lot of room to grow in this sector. eMarketer predicts that by the end of 2012, 115.8 million Americans will have smartphones. By 2016, that will jump to 192.4 million. All the telecom companies will be able to reap huge rewards from this growth as their revenue streams get fatter. Plus when you include the fact that the US population grows by around .7-.9% annually, you have 3 million more potential customers being born each year. There is a lot of future growth in this sector, and even after the smartphone market gets saturated, like it did in Japan, the telecom companies will be able to reap huge profits as they no longer have to subsidize as many smartphone purchases (save the one per customer every 2 years in the upgrade cycle).

Final Thoughts

Don't let the global economic slowdown get you down about investing. It's not about how much or how little you invest, but where you invest it. If you invest it in strong, resilient, fast growing sectors then you can beat slower GDP growth. While the US may go into a recession in 2013, you should look at sectors that can easily weather the storm like the healthcare and telecom industries. People have to live and everyone wants to text, chat, and surf the web on their smartphone.


callumturcan has no positions in the stocks mentioned above. The Motley Fool owns shares of Ford. Motley Fool newsletter services recommend Ford, The Home Depot, AT&T;, and Tenet Healthcare. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. Is this post wrong? Click here. Think you can do better? Join us and write your own!

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