Why Recession-Resistant Industries Matter

by Kaitlyn Ranze and Lucy Koeniger

No two recessions are alike. From natural disasters or war to banks making terrible decisions about mortgages, there are a variety of factors that can precipitate a recession. And while some industries are more likely to weather the storm, others suffer. This could impact not only your investments but also your work, especially as layoffs rise.

“Everyone’s paying attention to what’s happening in the economy right now,” says Christine Cruzvergara, Chief Education Strategy Officer at Handshake, a career network for recent grads. “Hiring managers know a potential recession is coming, and people are getting laid off. They understand that; it’s a human thing, and many have been in that boat.”

Cruzvergara recommends seeing which industries are hiring and getting creative about the roles you might apply for. If you’ve recently been laid off from a tech job, you might consider tech-adjacent positions in booming industries like health care, nonprofits, and higher education.

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What are the main differences between recessions?

First, it’s important to understand that high unemployment, falling consumer confidence, and declining business investment often characterize recessions. However, many factors can contribute to a recession. Let’s take a look at some examples.

The housing market collapse precipitated the Great Recession of 2008, leading to a domino effect in which financial institutions and investment firms lost billions of dollars. The recession prompted a global ripple effect, with many countries feeling the pinch.

The recession of 2001 was relatively short-lived, but it was nonetheless devastating. It was brought on by several factors, including the dot-com bubble burst and the 9/11 terrorist attacks. It led to many people losing their livelihoods via widespread job losses.

The recession of 1990-1991 was caused by factors including high oil prices and high interest rates. It resulted in widespread job losses and a rise in homelessness.

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So knowing that no two recessions are precipitated by the same events, what are industries that tend to be less impacted?

Here are a few examples of recession-resistant industries:

1. Healthcare

This industry is always in high demand, regardless of the economy. Businesses in this industry (pharmacy, hospitals, doctor’s offices) typically don’t see a significant dip during recessionary periods.

People will always need healthcare regardless of the state of the economy; demand for healthcare services is relatively inelastic. Unlike discretionary items such as vacations or new clothes, healthcare is something people cannot do without. Even when people tighten their belts, they still spend money on health care.

Lastly, the healthcare sector is supported by government spending. In the US, for example, government programs like Medicare and Medicaid account for a significant portion of healthcare spending. This means that even when private sector spending is down, government funding can help to prop up the healthcare industry.

2. Grocery stores

When it comes to recession-proof businesses, grocery stores and groceries are often at the top of the list. After all, people need to eat regardless of economic conditions. In fact, grocery stores usually do better during recessions because people cook at home more frequently to save money. However, other factors make the grocery industry less susceptible to recessionary pressures.

For one thing, grocery stores tend to be local businesses. Even large grocery chains are usually based in specific regions. This means that they are not as dependent on the economy’s overall health. When a recession hits, people may reduce their spending on non-essential items but still need to buy food.

Grocers also do well in recessions because they can often offer lower prices than other types of businesses due to low overhead costs and negotiating better deals with suppliers. Grocery stores can also take advantage of economies of scale, which means they can buy in bulk and get discounts that smaller businesses cannot. One thing to keep in mind is the historically high inflation right now.

3. Education

While the recession has plundered many industries, education has largely been unscathed. In fact, education is often one of the first industries to rebound after a recessionary period. Here’s why:

  • Education is a necessity.  People always need to learn, no matter the economic climate. And when budgets are tight, people are even more likely to take advantage of free or low-cost educational opportunities. They’re willing to make sacrifices in other areas of their lives to keep up their education.
  • Education is an investment. When people invest in their education, they are more likely to see a return. Educated workers are in high demand, and companies are willing to pay a premium for them.
  • Education helps people get jobs. One of the best ways to recession-proof your career is to get an education. Unemployment rises during a recession, so to be more competitive, they improve their skills. This is because educated workers are less likely to be unemployed and typically earn more than their non-educated counterparts.

4. Utilities

Like health care and grocery stores, people can’t do without utilities. So while other industries might see a decline in business during a recession, utilities typically don’t, despite people looking for more strategies to save on utility expenses.

Other key reasons utilities seem so recession-proof?

  • The government regulates utilities. This provides some stability for utility companies, as the government is unlikely to make sudden changes that could impact the industry negatively.
  • Utilities have long-term contracts. These contracts protect utilities from sudden changes in market conditions. Even if the economy takes a turn for the worse, utilities will still be able to rely on their existing contracts to keep them afloat.

So while there are many ways to save on utility expenses, they’re not avoidable.

5. Government

The government is another recession-proof industry because it doesn’t rely on consumer spending to function. In fact, during a recession, the government often steps in with stimulus programs and other initiatives to help boost the economy.

While there are no guarantees regarding recessions, these are a few industries that have historically been less impacted. So if you’re looking for a recession-proof career, eyeballing how you might adjust your retail investments, or just trying to predict the future, one of these might be a good option.

Read More

Preparing for a Recession

Level Up: Online Courses to Grow Professionally and Personally

Free or Cheap Ways to Upskill Professionally

How to Build Skills on a Budget

The Importance of Networking During a Recession

Everything You Need to Know About a Recession

Investments for Long-Term Goals

Short -Term Investments

How to Invest

Risk, Return, and Diversification

Retail Investing Explained

Why Now Might Be the Perfect Time to Start Investing

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