Recessions are challenging periods. Economic hardship is common, and many people worry that it may also affect them. However, a recession may present a chance for some professionals to prosper and advance.
The groups that benefit during a recession are those that offer cheap alternatives and specialize in products that are not affected by income.
To see if your industry might be affected by the looming recession that is expected to have global effects in the coming months, keep reading our list of industries that tend to do well during recessions below.
What Groups Do Well in Recessions?
Although recessions touch everyone within an economy, some groups are able to actually take advantage of the economic downturn to do better than during times of economic stability.
Businesses
These groups tend to have specific skills or products that are what some call “recession-proof” and include:
- Businesses that offer entertainment for cheap. Today, this would include things such as online streaming, online entertainment, books, and games.
- Businesses that specialize in dealing with bankruptcies and income loss. Pawn shops and companies that offer payday loans are two examples.
- Stores that sell inferior goods which is when a good’s demand rises when income lowers. This includes stores that sell generic brands, thrift stores, and even grocery stores.
- Firms that have greater overall efficiency. Businesses that have established processes that keep them efficient are most likely to survive a recession although this is not always the case.
Individuals
More often businesses are able to take advantage of recessions better than consumers, but there are some advantages to the average consumer as well:
- People looking to buy larger priced assets. A good example of this would be first-time home buyers who can take advantage of the falling price of assets.
- People who live on pensions see a benefit during recessions because of the falling rate of inflation that usually happens during a recession.
- The average person also gets some benefits from recessions. Life expectancy has been proven to rise during recessions with the thought being that with higher unemployment, people have less money to spend on harmful things like alcohol.
- People looking to invest. Those that are lucky enough to have extra income saved or gained during a recession can take advantage of the stock market and other investment opportunities that tend to be much cheaper during recessions.
Take a look at the video below for some more information about investing for the average person during a recession.
Industries That Perform Well in Recessions
During economic downturns, not all firms and industries experience the same amount of hardship. Some companies even gain as customers spend less on alternatives and other competing solutions.
Many of the businesses that thrive during recessions generally offer one or more of the following types of products:
- Products and services that see an increase in demand directly as a result of the economic downturn
- Provide less expensive alternatives to luxuries or large-ticket items
- Have relatively inflexible demand that is unaffected by changes in income
Healthcare Providers
Healthcare is the one sector that can be stated to be recession-proof. People will get sick in good times and bad, therefore it is unlikely that the healthcare sector would see the same amount of job losses or budget cuts.
Financial Advisors
Especially in a recession, those with significant assets want to make sure they are taken care of.
As people become concerned about the stability of their investments and seek advice on how to protect their holdings, financial advisors frequently experience an increase in business.
Mechanics and Auto Repair Shops
People are less likely to buy a new car in lean economic times. They will fix their old car instead.
When there is a recession, consumers may cheerfully spend a few hundred dollars on repairs to avoid making monthly car loan payments, which makes auto repair and maintenance businesses quite profitable.
Home Maintenance and DIY Stores
During a recession, many people would decide to upgrade or renovate their homes on their own rather than sell and move.
During a recession, many appliance repair service providers and businesses that sell tools and supplies for home maintenance, repair, and improvement projects are likely to experience stable or even rising demand.
Home Stagers
Even though selling a property is more challenging during a recession, some people must. As the housing market gets more competitive, those who specialize in home staging prosper.
Realtors, interior designers, or a combination of both might be home staging experts. A staging specialist makes a house more appealing by furnishing and arranging it to look its best to potential buyers.
Rental Agents and Property Managers
People who were compelled to sell their homes due to financial constraints and those who may not have been able to afford to buy during a recession nevertheless need a place to live.
For many, renting is the best option, at least in the short term. When renting becomes a more enticing alternative, if not the only one, during a recession, rental agencies, landlords, and property management firms can prosper.
Grocery Stores
For many people, eating out becomes extravagant during a recession. Due to customers choosing to prepare more meals at home and even host more parties at home, supermarkets frequently experience an increase in sales.
Bargain Discount Stores
During a recession, people tend to cut back on luxury, but that does not imply they never purchase anything that is not absolutely required.
You can find a wide range of additional inexpensive delights at sales and discount shops. When a recession strikes, people who ordinarily never visit a dollar store reconsider their shopping habits.
FAQs About Recessions
What groups thrive during recessions?
Recession-resistant industries include those that are largely inelastic, such as those in healthcare, food, consumer basics, and basic transportation.
This also includes businesses that are regarded as crucial sectors like hospitals during the COVID-19 pandemic.
How is the average person’s life affected by recessions?
When an economic downturn occurs a common result is that employees start to lose their jobs. For instance, during the most recent recession, about 22 million individuals lost their jobs.
If someone stays employed during a recession, their hours and/or commission rates may be cut. In a recession, employers also frequently reduce bonuses and raises.
What products are most in demand during a recession?
Products that are cheaper tend to do better during a recession because consumers still have the ability to purchase these items even with a reduction in income. These include products such as:
- Staple products like detergent, toothpaste, canned goods, etc
- Camping gear
- Car parts
- Coffee and tea
- Plastic storage containers like Tupperware
- Candy and sweets
- Cheaper cosmetic items
- Pet products
- Movies and games
- Cheaper clothing
- Baby products
Final Thoughts
Recessions touch everyone in an economy from consumers to businesses. Some industries and people, however, can take advantage of a recession to actually increase their income and come out on top once the recession finally ends.