Markets
The Top Performing S&P 500 Sectors Over the Business Cycle
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The Top Performing S&P 500 Sectors Over the Business Cycle
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The business cycle fluctuates over time, from the highs of an expansion to the lows of a recession, and each phase impacts the performance of S&P 500 sectors differently.
And though affected sectors have different levels of average performance, any given period may see the outperformance of certain sectors due to external factors, such as technological advancements or high-impact global events (i.e. global pandemics, international conflicts, etc.)
The above graphic uses data from SPDR Americas Research to show the top performing sectors through the business cycle over almost 70 years.
The Business Cycle: Methodology
The dataset is based on the Conference Board’s Leading Economic Index, which assesses U.S. economic activity. This index includes 10 economic indicators that reveal typical turning points in the business cycle covering employment, consumer expectations, and financial conditions.
Overall from December 1, 1960 to November 30, 2019, the dataset covers:
- 7 recessions
- 7 recoveries
- 12 expansions
- 11 slowdowns
Returns are shown for all of the S&P 500 sectors with the exception of the communication services sector. This is because the sector was created relatively recently in 2018 and comprises previous technology, consumer discretionary, and telecommunication stocks already covered in the dataset.
1. Recession
Broadly speaking, a recession is a period of temporary economic decline characterized by two successive quarters of falling GDP.
During this period, consumer staples was the top performing S&P 500 sector, and the only one that has averaged a positive return. Utilities and health care, traditionally defensive sectors, followed next in line. Together, these sectors averaged 10% higher returns than the overall market during six of the seven recessions.
| Rank | S&P 500 Sector | Average Period Return |
|---|---|---|
| 1 | Consumer Staples | +1% |
| 2 | Utilities | -2% |
| 3 | Health Care | -3% |
| 4 | Energy | -4% |
| 5 | Consumer Discretionary | -12% |
| 6 | Materials | -12% |
| 7 | Financials | -13% |
| 8 | Industrials | -15% |
| 9 | Technology | -20% |
| 10 | Real Estate | -22% |
Real estate has been the worst performer during recessions, given its high sensitivity to discretionary spending as both household income and business activity tend to decline.
2. Recovery
A recovery is the phase following a recession where economic activity starts to increase and the economy begins to grow again.
Real estate outperformed all other sectors with an average 39% return. As monetary policy eases and interest rates fall historically after recessions, this makes purchasing real estate more affordable, in turn supporting the sector’s performance.
| Rank | S&P 500 Sector | Average Period Return |
|---|---|---|
| 1 | Real Estate | +39% |
| 2 | Consumer Discretionary | +33% |
| 3 | Materials | +29% |
| 4 | Technology | +28% |
| 5 | Industrials | +27% |
| 6 | Energy | +27% |
| 7 | Financials | +23% |
| 8 | Health Care | +21% |
| 9 | Consumer Staples | +18% |
| 10 | Utilities | +15% |
We can see in the above table that all sectors posted double-digit returns as consumer confidence and labor market conditions improved during recoveries.
3. Expansion
In this phase of the business cycle, the economy is growing beyond recovery. It is characterized by increased economic output, employment, and income.
Interestingly, market returns were the second-best overall after recoveries. Top sectors included technology (21%), financials (19%), and real estate (18%) as economic activity climbed to its peak.
| Rank | S&P 500 Sector | Average Period Return |
|---|---|---|
| 1 | Technology | +21% |
| 2 | Financials | +19% |
| 3 | Real Estate | +18% |
| 4 | Consumer Discretionary | +17% |
| 5 | Industrials | +16% |
| 6 | Energy | +16% |
| 7 | Materials | +13% |
| 8 | Consumer Staples | +11% |
| 9 | Health Care | +11% |
| 10 | Utilities | +8% |
The utilities sector has historically seen the slowest growth across all sectors as investors tend to favor cyclical S&P 500 sectors that rise with an expanding economy.
4. Slowdown
This phase is often considered a peak in the business cycle, where growth starts to decline, but the economy is not necessarily shrinking.
With 15% average returns, health care excelled during slowdowns. Often, investors reduce their exposure to cyclical sectors as they prepare for an economic downturn, looking for more defensive investments. Similarly, consumer staples saw strong performance on average.
| Rank | S&P 500 Sector | Average Period Return |
|---|---|---|
| 1 | Health Care | +15% |
| 2 | Consumer Staples | +15% |
| 3 | Financials | +14% |
| 4 | Utilities | +12% |
| 5 | Industrials | +12% |
| 6 | Technology | +10% |
| 7 | Energy | +9% |
| 8 | Materials | +7% |
| 9 | Consumer Discretionary | +6% |
| 10 | Real Estate | +2% |
Just as real estate saw a steep drop-off during recessions, it witnessed the lowest relative returns when the economy slows and costs tend to increase.
The Case for Diversification
The above data highlights how having a diversified portfolio of investments can help reduce sector-specific risk given the distinct performance trends of individual sectors over the business cycle.
Agriculture
Top U.S. Food Imports by Origin Country
This infographic shows the top exporting countries for U.S. food imports, ranging from exotic fruits to meat, oils, spices, and more.
Creator Program
Top U.S. Food Imports by Origin Country
The U.S. is a major producer and exporter of food products, but did you know that it’s also one of the world’s largest food importers?
Due to seasonality and climate, some foods can’t be grown on home soil, at least enough to fulfill consumption demands. Indeed, many familiar grocery items come from other countries.
This infographic from Julie Peasley uses data from the Chatham House Resource Trade Database (CHRTD) to show where the U.S. gets its food from, highlighting the top exporting countries of various imported food items.
The Types of Imported Foods
The U.S. imported around $148 billion worth of agricultural products in 2020, and according to the USDA, this has since risen to $194 billion in 2022.
Around 50% of all U.S. agricultural imports are horticultural products like fruits, vegetables, tree nuts, and more. Other large import categories include sugar and tropical products, meat, grains, and oilseeds.
With that context in mind, we break down each category and highlight the five foods with the largest single-origin import value.
Farm Fresh: Fruit and Vegetable Imports
U.S. fruit and vegetable imports have been on a steady rise since 2000. In fact, between 2011 and 2021, fruits and nuts imports made up 44% of domestic consumption, while 35% of vegetables consumed in the U.S. came from outside the country.
Mexico is by far the largest exporter of fruits and vegetables to the United States.
| Fruit or Vegetable | Largest Exporting Country | U.S. Import Value (2020) |
|---|---|---|
| Tomatoes | 🇲🇽 Mexico | $2.5B |
| Avocados | 🇲🇽 Mexico | $2.1B |
| Peppers | 🇲🇽 Mexico | $1.4B |
| Bananas | 🇬🇹 Guatemala | $1.0B |
| Strawberries | 🇲🇽 Mexico | $897M |
The U.S. imported $2.5 billion worth of tomatoes from Mexico in 2020, representing 31% of international tomato trade. Avocados, native to central Mexico, were nearly as popular with $2.1 billion worth of imports.
Generally, the largest exporters of fruits and vegetables to the U.S. are North and South American countries, with products often coming from Guatemala, Chile, Peru, Costa Rica, and Brazil.
Beefed Up: Meat Imports
The U.S. is the world’s largest overall consumer of beef (or bovine meat), and the third-largest per capita consumer at nearly 37.9 kg (84 lbs) per person per year.
Therefore, despite being one of the top producers of beef, the country still imports a lot of it.
| Meat | Largest Exporting Country | U.S. Import Value (2020) |
|---|---|---|
| Bovine Cuts | 🇨🇦 Canada | $1.4B |
| Bovine Cuts, Frozen | 🇳🇿 New Zealand | $839M |
| Sheep Meat | 🇦🇺 Australia | $643M |
| Swine Hams, Shoulders, and Cuts | 🇨🇦 Canada | $559M |
| Bovine Cuts, Bone In | 🇲🇽 Mexico | $449M |
Precisely, The U.S. imported $8.7 billion worth of meat in 2020. Canada was the largest source of imported beef, with the U.S. accounting for more than 70% of all Canadian beef exports.
The sources of meat imports are more geographically diverse than fruits and vegetables, with billions of dollars of imports coming from New Zealand and Australia.
Making Waves: Seafood Imports
Despite plenty of coastlines, the U.S. imports 70–85% of all its seafood and accounted for 15% of global seafood imports in 2020 at $21.8 billion.
Frozen shrimp and prawns were the top seafood import, with $1.9 billion worth from India.
| Fish and Seafood | Largest Exporting Country | U.S. Import Value (2020) |
|---|---|---|
| Shrimp and Prawns, Frozen | 🇮🇳 India | $1.9B |
| Fish Fillet or Meat | 🇨🇱 Chile | $1.4B |
| Fish Fillet or Meat, Frozen | 🇨🇳 China | $884M |
| Lobsters | 🇨🇦 Canada | $764M |
| Crabs, Frozen | 🇨🇦 Canada | $719M |
The largest source of U.S. seafood imports overall with $3.1 billion total was Canada, which leads in lobster, crab, and whole fish imports. It was followed by Chile at $2.1 billion, primarily for parts of fish (fillet or meat, fresh or chilled).
Other Foods: Oils, Grains, Coffee, and More
There are plenty of other types of foods and agricultural products that the U.S. relies on other countries for. Here are the largest single-origin U.S. food imports for the remaining categories:
| Food | Category | Largest Exporting Country | U.S. Import Value (2020) |
|---|---|---|---|
| Canola Oil, Refined | Oils | 🇨🇦 Canada | $1.4B |
| Coffee, Not Roasted | Stimulants/Spices | 🇨🇴 Colombia | $1.0B |
| Cashews, Shelled | Nuts/Seeds/Beans | 🇻🇳 Vietnam | $960M |
| Raw Sugar, Refined | Sweetners | 🇲🇽 Mexico | $723M |
| Rice | Cereals | 🇹🇭 Thailand | $713M |
| Cheese | Dairy | 🇮🇹 Italy | $310M |
Some of the highest and potentially surprising exports? Imports of refined Canadian canola oil totaled $1.4 billion in 2020, while Vietnam exported a whopping $960 million worth of cashews to America.
A Global Plate: The Diversity of U.S. Food Imports
The amount and value of food imported to the U.S. highlights the diversity of consumer preferences and the importance of global food stocks, considering America is one of the world’s leading food producers.
With countries having to rely on others to satisfy demand for limited production supply or exotic foods, the interconnectedness of the global food system is both vital and delicate.
What’s clear is that the U.S. food plate is indeed a global one, with many foods taking remarkable journeys from farm to fork.
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