Industries That Flourish & Fade During Economic Downturn

Fears of a coming recession have reached an all-time high. Inflation remains high, wreaking
havoc on the stock market, and firms are planning for the worst by imposing layoffs, hiring
freezes, and, in extreme cases, rescinding job offers.

 
Following months of great employment prospects and rising employee salaries, many
workers are bewildered by the unexpected turn in labour market dynamics.

If you’re thinking about changing careers, keep in mind that, while no employment is
completely recession-proof, certain industries do worse than others during a downturn.
According to Bureau of Labor Statistics data, major employment losses occurred in the
construction and manufacturing industries during the Great Recession, which lasted from
2007 to 2009.

According to Karen Dynan, a Harvard University economics professor and former US
Treasury chief economist, this is because, during an economic downturn, individuals often
limit their discretionary spending and postpone significant purchases such as autos and new
homes.

She predicts that if a recession strikes soon, these businesses will follow suit.
 

What Is a Recession-Proof Business?

 
Consumer demand decline is one economic indicator of a recession, generating cash flow
problems for businesses that can lead to bankruptcies and other financial problems. In
contrast, a recession-proof business is one that is ideally suited to survive the rigours of a
downturn.

Even when the economy is struggling, recession-proof businesses frequently operate in
industries that are not subject to large downturns.

Remember that each recession introduces its own set of economic conditions, making
forecasting how the next recession will influence certain industries impossible. Most
“recession-proof” businesses, on the other hand, do not experience large changes in
consumer demand and have little overhead costs.

Understanding the similarities between recession-proof business models allows you to incorporate such practices into your current organisation or ensure that these aspects are included in your future venture.
 
Check out All Finance Tax’s infographic below for a more in-depth look at ‘Industries That
Flourish & Fade During Economic Downturns.’
 

 
Published by our friends at All Finance Tax