Sometimes the best indicators of the way forward can be found by looking back, which is why
"Mapping Decline and Recovery Across Sectors," is worth a read. The report published in the latest McKinsey Quarterly (registration required) analyzes the financial performance of U.S. corporations during the last four recessions (mid-70s, early 80s, 1991, 2001), uncovering trends that may have contributed to the length and depth of those downturns.
Specifically, the report analyzes returns to shareholders, revenue growth and growth in Ebita around the
times of these downturns. Sectors studied consumer discretionary and staples, energy, financial, healthcare, industrial, IT, materials, telecommunications and utilities. Here are a few highlights:
- All four recessions began with falling sales and Ebita in the consumer discretionary sector
- Energy was the last sector to be affected in three of the four recessions
- Healthcare and consumer staples have been the most resilient sectors
- It typically took six to eight quarters for Ebita to bottom out; the time needed to recover to peak Ebita levels was much longer
- Higher consumer discretionary and IT spending led the recovery in three of the four recessions
- Total return to shareholders generally stopped declining near the end of the recessions
These comparatives don't provide definitive answers as to how deep and how long the current recession will last. But they do highlight some trends worth watching for in the months ahead.
- Suzanne Stevens
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