10 Businesses That Perform Well In Recessions
1. Grocery Stores
During challenging economic times, many people stop dining out and cook at home. This results in a boost in sales at grocery stores. People will always need to eat regardless of the economic climate and food is a basic necessity. We cannot live without it and therefore it is price inelastic. Thus, a significant rise in food prices will lead to an insignificant fall in the demand of food.
Inflation is really challenging the restaurant owners who've survived the Pandemic and they've been forced to increase menu prices. Some 90,000 restaurants in the U.S. have closed down temporarily or permanently since the pandemic, according to the National Restaurant Association. Those that survived, Riehle says, are running on razor thin margins, often as little as 1% of sales.
2. Vices - Alcohol, Tobacco, Candy and Porn
I will never forget when my capital markets professor in college discussed business that thrive during recession and dedicated 10 minutes to porn during a lecture.
When vacations, homes, and electronics aren't affordable, many people console themselves with their favorite vice - beer/wine/liquor, cigarettes, candy and porn. All are terrible habits, but historically, these industries perform well during recessions.
3. Staffing Agencies
In many industries affected by recession, companies are cutting costs and people are getting laid off. Still, staffing/recruiting agencies are quite busy serving the industries that thrive during recessions and will continue to need more staff.
4. Accounting, Tax, Financial Services
During a recession, these services will always see high demand. As more and more complex laws and regulations are introduced every year, business owners and individuals will need help interpreting these laws and regulations and how to properly navigate them.
In 2020, revenue in the US accounting industry is estimated to be over $110 billion.
It's vital for businesses to have their finances in order regardless of what's happening in the economy.
5. Cybersecurity and Tech Services
The Pandemic drove all of us into our homes and onto the internet. Online sales have skyrocketed and scammers/criminals have followed, trying to score quick paydays off of unsuspecting online shoppers. As a result, professionals with cybersecurity skills are in demand.
It is estimated that senior citizens were scammed out of $1 billion in 2020 alone.
6. Health Care
The healthcare industry continues to grow even during recessions due to a combination of rising demand and the constant advancement of science and medicine. People need healthcare to live, regardless of the state of the economy, so there will always be demand for it. Significant uncertainty is contributing to the mental health crisis and mental health professionals are seeing increased demand.
During a recession, because buying new is not always a possibility, repairing items already owned become far more popular. For instance, while car sales historically go down during a recession, automotive repairs go up. The same can be said for computers, furniture, and the like. For those who are handy, this can be a boon.
8. Freelance and temp work
Full-time employees are one of the first casualties of recessions. Since full-time employees are very expensive, many businesses switch to hiring freelance and temp workers. During recessions, the freelance market thrives, as independent contractors and freelancers are much more afforable than their full-time counterparts.
The pet industry in America is a huge business. During the COVID lockdowns, with millions of people quarantined in their homes, isolation was a real problem. Many people turned to little furry friends to help with loneliness, and the pet industry passed $100 billion in sales in 2020 alone.
10. Debt Collectors
Debt is a way of life in America. Too many use it to buy electronics, motor vehicles, homes, and education. When people can't pay their bills, debt accumulates and the need for people to help collect on those debts increases.