Few US Industries Currently Shine

THE current United States economic downturn has thrown a mantle of gloom over the front offices of corporate America. ``The recession is proving to be both broad and, in the case of consumers, deep,'' says David Wyss, an economist with DRI/McGraw-Hill, an economic consulting and forecasting firm in Lexington, Mass. ``There are very few industries [in the US] that won't be hurt,'' says Mr. Wyss. Economic recovery, assuming that it isn't aborted by a protracted war in the Gulf region, won't have a positive effect on most industries until early in 1992, Wyss says.

Although the economic consensus is that recovery should be under way later this year, the upturn is expected to be mild. According to a recent report by Kidder, Peabody & Co., US gross national product will only be rising by about 1.5 percent during the second half of 1991. ``Economic growth,'' Kidder Peabody concludes, ``will be slower in the rebound than in previous post-recessionary periods, and below trend growth should prevail for several years.''

When economists refer to dominant US industries, they invariably point to a small cluster of companies and sectors. In a new book, ``The First Universal Nation,'' political commentator and demographer Ben Wattenberg notes that the US ``holds the technological lead in aircraft, airlines, pharmaceuticals, computers, biotechnology, plastics, synthetic fibers, telecommunications equipment, and petroleum exploration, to only begin a very long list.''

That's true. But as Wyss notes, most of those same industries are now trapped in recession. Their best prospects, he says, will come after 1991.

Wyss sees only a handful of US industries as currently strong. ``Some rebound in the oil industry and the oil services sectors'' can be expected, he notes, given climbing energy prices. Also, last year's congressional enactment of new clean air legislation will benefit public utility construction and some pollution control companies. The pharmaceutical and health care sectors should also do fairly well, he says, since they tend to be recession-proof. But even in the case of pharmaceuticals there are challenges, such as political pressures to hold down consumer costs. US export industries should also do well, says Wyss, from capital goods to motion pictures. Exports, he notes, are being benefited by continued growth in Europe.

But the ``big ticket'' industries - aircraft, airlines and computers - are all experiencing tough challenges. Most businesses are now pruning back on outlays, including those on computers and office equipment. US airlines have been socked by higher fuel charges, with Pan Am's recent bankruptcy-filing underscoring the industry's woes. Regarding aircraft, there is a sizable backlog of orders. But Wyss believes that it will be difficult for carriers to commit themselves to costly new plane orders this year and, perhaps, early next year.

Joseph Tigue, who is managing editor of Standard & Poor's Outlook, a publication geared to analyzing the stock market, also finds few US industries to crow about. ``We're still recommending very defensive stocks and stock sectors,'' says Mr. Tigue.

Underscoring the impact of recession, the S&P 500 was changed last week: Pan Am, once the crown jewel of the US aviation industry, was dropped from the S&P 500. Taking its place: Blockbuster Entertainment, which owns a chain of video stores. (Blockbuster's stock, traded on the New York Stock Exchange, promptly advanced.) Videos look relatively strong in the recessionary setting, says Mr. Tigue.

Promising sectors, he says, include pharmaceutical stocks and selected health-care companies; electric utilities, ``which should benefit from falling interest rates and high yields''; household products, such as consumer goods made by Procter & Gamble, Unilever, and Colgate-Palmolive; food stocks (General Mills); and railroads. Studies show, says Tigue, that railroads tend to perform well during recessions, in part because they are major carriers of coal (for energy usage) and grain (for food).