Morgan Stanley analysts project a bifurcated recovery in 2026, with growth concentrated among firms connected to fixed-asset investment while production-oriented businesses experience a slower recovery and consumer-focused names are the weakestly positioned.
The firm highlighted that the Iran conflict has intensified this split by contributing to higher energy prices and interest rates, which in turn weigh on consumer spending power. At the same time, less reliable global supply chains and a widening gap between US and international gas prices raise the chance that additional manufacturing capacity will relocate to the United States.
Data cited by Morgan Stanley for early 2026 show a pronounced divergence in import patterns. US Capital Goods imports have sustained roughly 30% year-over-year growth, while US Consumer Goods imports have continued to fall, tracking approximately 30% year-over-year declines. The firm described this pattern as a marked departure from historical norms.
Relative to the 2022-24 period, US Capital Goods imports are holding about 35% growth, which Morgan Stanley interprets as evidence that US re-industrialization is occurring and consistent with the firm’s $10 trillion US Reshoring thesis.
Morgan Stanley also noted that a US Reshoring outcome does not necessarily increase consumption of goods and could, on net, reduce consumption because of higher costs. The primary beneficiaries in this scenario are not the companies selling consumer products but the businesses that build and service new domestic facilities - that is, US Industrials.
Regarding inventory dynamics, the firm pointed to an outsized first half 2025 pull-forward followed by second half 2025 destocking. Current data indicate that US inventory levels have broadly normalized, and US imports have settled into a run-rate similar to levels seen before the November 2024 election.
On trade flows involving China, Morgan Stanley reported ongoing pressure on Chinese exports in the first quarter of 2026. In the 25 days after Lunar New Year 2026, China’s exports were tracking about 2% below levels recorded after Lunar New Year 2025, despite the uptick in US imports.
The firm identified a group of industrial and capital goods companies it views as best positioned in this environment: Rockwell Automation (ROK), Parker-Hannifin (PH), W.W. Grainger (GWW), Johnson Controls (JCI), Hubbell (HUBB), Vertiv (VRT), AMETEK (AME), Trane Technologies (TT), Eaton (ETN), Regal Rexnord (RRX), and Gates Industrial (GTES).
Conversely, Morgan Stanley expressed concern about the prospects for several other names, listing Carrier Global (CARR), Lennox International (LII), Emerson Electric (EMR), Ingersoll Rand (IR), Allegion (ALLE), Otis Worldwide (OTIS), Stanley Black & Decker (SWK), and 3M (MMM) as less favorably positioned.