Industry Revenue Betas
Summary
Consensus outlook for US economy seems to be turning towards stronger RGDP growth and hotter CPI.
Witness GDPNow of 3% for Q4`24 and spike in inflation expectations.
Which industries would benefit from this environment?
I’m exploring the top line impact. I computed simple linear correlation coefficients via the NIPA accounts for RGDP growth with Volumes and CPI growth with Unit Prices.
Scatter plot suggests manufacturers’ top line will stand to benefit the most. Usual caveats: i) history is a guide, ii) the relationships are linear and so can be captured with linear correlations, iii) there are no lead lags, iv) stable DGPs, etc…
Among manufacturers, durables seem to have the higest leverage to this high NGDP landscape.
Fabricated metals and Furniture are among the most positively exposed, i.e. rising volumes and unit prices