The end of the calendar year is frequently a time of reflection for events that occurred over the past 12 months. It is also a point at which predictions are made for the coming year and for trying to discern trends that will last over the coming few years. With that, here is an overview of five industries worth watching for 2011 and over the next couple of calendar periods. In terms of facts, figures and projected growth rates, many stem from The Economist's Economic Intelligence Unit, which projects growth rates in the coming year for global economies and industries in one of its end-of-year publications. (For related reading, also check out Industries Where Fortunes Rise As The Snow Falls.)
IN PICTURES: 5 "New" Rules For Safe Investing

Financials
The industry that came close to bringing many global economies to their knees is in the midst of a strong and sustainable recovery. Profits in the coming year are expected to return and even exceed pre-crisis levels as banks continue to repair their balance sheets and the industry overall shifts from government-injected capital and returns to self sufficiency.

Changes that consumers will continue to see include rising interest rates for credit card and mortgage loans, though late fees and other fees should continue to feel pressure from Washington. A current program in the works is to restrict the amounts that financial institutions can charge on debit card transactions, though any fee savings will likely stay with retailers.

Healthcare
Demographic trends should continue to work in the favor of the healthcare industry in 2011 and beyond. Aging populations, especially in Japan and many parts of Europe, mean increased spending through pharmaceutical sales, hip and knee replacements and doctor visits.

Patent expirations from branded drugs will continue for the next several years and will further shift the playing field to generic drug makers. It won't be until 2012 that many aspects of recent healthcare legislation will take effect in the U.S., so it will continue to lead the world in healthcare spending. Currently, more than 16% of GDP is expended on healthcare in the United States. In the rest of the world, it is closer to 10%.

Travel and Tourism
An improving economy helps drive discretionary spending. At the top of most consumers' lists is travel and tourism. Spending on hotels was hit by a double whammy of a recession and many years of rapid building, but should continue to see supply and demand come into better balance. And after many years of overcapacity, consolidation in the airline industry has started to improve the profit outlooks and balance sheets of many airlines throughout the world.

The industry will continue to be economically sensitive and is always susceptible to security concerns. Economically, 2011 should see smooth sailing for many tourism providers and travel destinations, and though security concerns will always be prevalent, it has been some time since a major event has shaken up the industry.

IN PICTURES: 4 Biggest Investor Errors

Consumer Staples
The consumer staples industry stands out in any economic climate for the stability of its demand. Consumers always need to eat and buy basic necessities such as food, clothing, as well as maintaining and heating homes. Prices can be volatile, as they rely on commodity prices that fluctuate along with global weather patterns and uneven financial markets, but for the most part, the industry is about as stable as can be found out there. Worries for the coming year stem from food and other commodity inflation, but so far prices rises haven't been too traumatic.

Defense
The domestic defense industry is in the doldrums due to budget cutbacks and the winding down of major combat operations in Iraq and Afghanistan. Since the tragedies of September 11, 2001, defense spending has grown at a rapid clip close to 10% annually. That figure will likely be cut in half going forward, but is still pretty strong by historical standards.

Additionally, tensions in the Korean peninsula are at risk of rising and could start a new conflict. And globally, emerging markets are set to increase defense spending dramatically and one day hope to compete with the approximately $700 billion spent annually on defense in the U.S. China is a distant second in the world, though it is not clear what it spends each year on defense. India is also expected to increase its commitment to defense, as is Russia. Growth in U.S. ally spending helps the domestic industry in terms of exports.

The Bottom Line
Major industry drivers for the coming year stem from an improving economy and demand for goods and services from emerging markets. Healthcare, defense and consumer staples are less affected by the business cycle, though they do have their own respective industry drivers that must be watched closely. Financials and tourism are more economically sensitive, but given the predictions for improvements going forward, look interesting for their growth potential over the next several years. (For related reading, take a look at Industries That Thrive On Recession.)

For the latest financial news, see Water Cooler Finance: FBI Insider-TradingBust.

Related Articles
  1. Investing News

    Is the White House too Optimistic on the Economy?

    Are the White House's economic growth projections for 2016 and 2017 realistic or too optimistic?
  2. Stock Analysis

    Best Stocks to Buy for Around $1 (NXTD, MBII)

    Watch for strong technical indicators and other positive information when considering the purchase of any stock trading in the $1 range.
  3. Budgeting

    The Honest Company Bundles Review: Are They Worth It?

    Learn more about The Honest Company and its bundle subscription services, which deliver discounted diapers, formula and other baby products to your doorstep.
  4. Personal Finance

    Zika Virus: Latest Advice on Staying Safe

    Zika has hit the U.S. Here’s the most recent update on what’s known about the virus, how it spreads, who’s at highest risk and how to avoid it.
  5. Investing

    How To Make Sure Your Healthcare Costs Do Not Ruin Your Retirement

    The best proactive plan of action for a stable retirement is to understand medical costs, plan ahead, invest properly, and consider supplemental insurance.
  6. Investing News

    Zika: Study Says This Device Could Protect You

    New research just uncovered an inexpensive, commercially available device that might help fight off the mosquito that carries the dreaded Zika virus.
  7. Investing

    3 Small Steps to Maximize Your Investing Goals

    Instead of starting the New Year with ambitious resolutions, why not taking smaller manageable steps that can have a real impact.
  8. Investing News

    Stryker Corporation: A Strong Capital Position

    A discussion on business operations, financials, valuation and growth trends for Stryker Corporation.
  9. Investing News

    How Zika Is Infecting the Travel Industry

    The Zika virus is declared a public health emergency as airlines, cruise lines and other travel companies accommodate customers and assess the damage.
  10. Stock Analysis

    The Top 5 Micro Cap Biotechnology Stocks for 2016 (BSTC, OSIR)

    Discover some of the most promising micro-cap biotechnology stocks that investors can consider for their 2016 investment portfolio.
RELATED FAQS
  1. Can CareCredit be used for family members?

    CareCredit has become a widely used option when it comes to paying for medical procedures, primarily procedures not typically ... Read Full Answer >>
  2. Does dental insurance cover crowns?

    Dental insurance coverage may vary according to the type of plan and the level of benefits that you have elected. Most dental ... Read Full Answer >>
  3. Are Flexible Spending Account (FSA) contributions tax deductible?

    The contributions you make to your Flexible Spending Account (FSA) are not tax-deductible because the accounts are funded ... Read Full Answer >>
  4. Does a Flexible Spending Account (FSA) cover Lasik?

    Flexible spending accounts (FSA) can be used to pay for qualifying LASIK procedures. LASIK is not the only laser eye surgery ... Read Full Answer >>
  5. Are Flexible Spending Account (FSA) expenses tax deductible?

    Flexible Spending Account (FSA) expenses are not tax deductible. The U.S. Internal Revenue Service (IRS) states you cannot ... Read Full Answer >>
  6. Does a Flexible Spending Account (FSA) cover acupuncture?

    A Flexible Spending Account (FSA) covers acupuncture. The Internal Revenue Service (IRS) has defined acupuncture as a qualifying ... Read Full Answer >>
Hot Definitions
  1. Liquidation Margin

    Liquidation margin refers to the value of all of the equity positions in a margin account. If an investor or trader holds ...
  2. Black Swan

    An event or occurrence that deviates beyond what is normally expected of a situation and that would be extremely difficult ...
  3. Inverted Yield Curve

    An interest rate environment in which long-term debt instruments have a lower yield than short-term debt instruments of the ...
  4. Socially Responsible Investment - SRI

    An investment that is considered socially responsible because of the nature of the business the company conducts. Common ...
  5. Presidential Election Cycle (Theory)

    A theory developed by Yale Hirsch that states that U.S. stock markets are weakest in the year following the election of a ...
Trading Center