A Real Economy publication

2022 industry outlook

Industry-specific quarterly insights for the middle market

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Economics

Developed by our industry senior analysts

The Real Economy: Industry Outlook provides a collection of sector-specific insights developed by our RSM US LLP industry senior analysts, a select group of professionals dedicated to studying economic and industry data, market trends and the emerging issues faced by middle market businesses.

Each outlook offers a data-driven approach to industry research, examining the impact of economic factors, including earnings, competitive landscape, consumer behavior, capital flows, mergers and acquisitions activity, supply chain, labor and more.

From recovery challenges and opportunities to future growth, what are the issues affecting middle market businesses?

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Business services and professional services

Amid a competitive labor market, inflation and increased expenses are eroding the professional services industry’s relative shelter from public health disruptions and supply chain constraints. Business services firms, meanwhile, must ask themselves if they can continue to pass on rising costs to their customers, or if it is more viable to scale down expenses—specifically, employee costs.

Consumer products

From managing costs and adapting to consumer preferences to addressing a tight labor market and supply chain challenges, consumer products businesses face a variety of issues for the remainder of this year. Retailers, restaurants, apparel companies, food and beverage businesses, and more continue to navigate a complex economic environment.

Key takeaways for the consumer products industry:

  • Consumers are shopping earlier for seasonal purchases to take advantage of deals prior to the prime shopping seasons.
  • Food and beverage companies are investing in technology to drive efficiencies, increase productivity and reduce dependency on labor. 
  • For consumer goods companies to succeed, they must invest in tools that provide insights into their customers and product trends.

Financial services

  • Private credit and venture debt funds have been on the rise in recent years and may stand to benefit in the economic environment expected to unfold over the next few quarters.
  • For a financial institution to stay ahead of the game and have a competitive advantage in the market, leadership teams need to start thinking about the metaverse.
  • Unleashing the potential of automation requires insurers to make strategic investments in their technology and people.

Government contracting

Government contractors face a variety of exogenous factors outside of their control—geopolitical conflict abroad, unpredictable timelines in Congress and antitrust regulators blocking transactions. Those that can respond when circumstances escalate, de-escalate, progress or halt will reap the reward of their planning and predictions.

Health care

Facing challenges ranging from the pandemic’s lingering impact to economic uncertainty, health care organizations continue to work toward new opportunities with the help of advanced technologies and growth strategies.

Life sciences

Looking ahead, life sciences companies will encounter fundraising challenges and increased competition for experienced and highly skilled talent, as well as fallout from volatile economic conditions. However, innovation and opportunity are always on the horizon for many businesses in the biopharma, life sciences services and medtech sectors. We explore what’s happening and what’s to come.

Manufacturing and energy

Looking to summer 2022, manufacturing and energy companies will need to navigate evolving geopolitical risks, electric vehicle infrastructure challenges, the rise of the metaverse, and supply chain implications that accompany the increasing importance of environmental, sustainability and governance issues.

In our summer edition of The Real Economy: Industry Outlook for manufacturing and energy, RSM senior analysts examine the increasingly bifurcated global trade landscape and the challenges it raises for companies. We also assess the gap between EV demand and the lack of EV charging stations across North America, what the metaverse hype means for the industrial sector, and how businesses need to rethink sourcing and supply strategies as ESG priorities move front and center.

Real estate

An inflationary economy, underscored by a series of interest rate hikes by the Fed, is unlikely to dampen interest in U.S. real estate, which remains a safe haven for investors, who have become more risk averse.

Meanwhile, though we expect to see sharp deceleration of appreciation in home values in the second half of the year, as well as some price corrections, the housing market remains on a solid foundation, propped up by a long-term housing shortage and growing rate of household formations.

Finally, a host of factors is weighing down the senior housing sector. Financial struggles related to the economic slowdown have led some boomers to put a hold on retirement, a shift helped by fast-changing workplace dynamics that have brought many senior workers new remote and hybrid work options. We explore growth in multigenerational housing, which coincides with these trends.

Technology, media and telecom

The future holds several exciting opportunities for technology, media and entertainment, and telecommunications companies. Artificial intelligence and machine learning are becoming more prevalent in everyday life, and related companies are seeing more investment activity as a result. The media landscape is undergoing a major shift as sports broadcasting contracts come up for renewal, with more interest from large tech companies. For telecommunications companies, automation is becoming a key strategy to reduce costs and enhance performance.

The Real Economy Blog

The Real Economy Blog was developed to provide timely economic insights about the middle market economy. It is offered as a complement to RSM’s macroeconomic thought leadership, including The Real Economy monthly publication and the proprietary RSM US Middle Market Business Index (MMBI).

The voice of the middle market

Middle market organizations, which make up the “real economy,” are too big to be small and too small to be big. They have distinct challenges and opportunities around resources, labor, technology, innovation, regulation and more.