Question

Here are four industries and four forecasts for the macroeconomy.

Industries: housing construction, health care, gold mining, steel production
Economic Forecasts:
Deep recession: falling inflation, falling interest rates, falling GDP.
Superheated economy: rapidly rising GDP, increasing inflation and interest rates.
Healthy expansion: rising GDP, mild inflation, low unemployment.
Stagflation: falling GDP, high inflation.
Choose the industry that you would expect to perform best in each scenario.
Economic Forecasts
Industries
Deep recession Gold mining Superheated economy Housing construction Healthy expansion Health care Stagflation Steel production

Answer 1

Deep Recession - HEALTH CARE

Healthcare are not really affected by the economic cycle because humans will always need healthcare. Even in a deep recession therefore, Health Care would still thrive.

Superheated Economy - STEEL PRODUCTION

Steel production benefits from a superheated economy because more steel would be needed for production and building projects and it will therefore be in high demand making this industry quite lucrative in a Superheated economy.

Healthy Expansion - HOUSING CONSTRUCTION

Mild inflation means mild interest rates as well and with a rising GDP and low inflation, people are able to get more loans for construction and so Housing construction would do best in such an economy.

Stagflation - GOLD MINING

In such an economy where inflation is high and probably rising, gold and other precious minerals like silver tend to do well because they are considered safe haven assets in that they will increase in value when there is inflation but rarely fall past a certain value when there isn't.