Recessions are difficult times. Many people suffer economically and even more worry that they might, too. But for a select group of professionals, a recession may actually be an opportunity to thrive and grow. Here are some of them.
- Not all businesses and industries feel the same pain during economic downturns.
- Some businesses even benefit as consumers cut back on substitute products and other competing options.
- Many of the businesses that do well during recessions either provide goods and services that increase in demand directly due to recession conditions, offer cheaper alternatives to luxuries or big ticket purchases, or for which demand is relatively inflexible to changes in incomes.
No matter what the economy is like, both people and businesses have to pay taxes and keep their finances in order. It can be even more important in tougher economic times.
Accountants are likely to experience an increase in business during a recession, since many people and small businesses may require the help of a professional to ensure they're making use of all the tax benefits available to them, and that they have a clear understanding of their income and expenditures as cash flow tightens.
Also, it has become common for new government benefit programs, loan guarantees, and financial regulations to be rolled out, updated or expanded during recessions. For example the federal government recently passed a slew of new economic stimulus measures intended to compensate for the economic damage being caused by the government response to Covid-19. Accountants can help people understand and navigate the new requirements and benefits of these changes for their business and personal finances.
The CARES Act provided over $2 trillion in new spending to compensate businesses and taxpayers for the economic damage inflicted by government efforts to combat the coronavirus.
At the very worst, some people may require the services of an accountant if they're forced to file for bankruptcy.
If any industry can be said to be recession-proof, it's healthcare. People will get sick in good times and bad, so the healthcare industry isn't likely to experience the same level of cutbacks or job losses.
This is especially so during the current economic crisis surrounding the public health response to the Covid-19 outbreak. As the focus of efforts to combat the virus, this industry is seeing an influx of public and private funding. However, some parts of this sector, such as the provision of elective surgeries, have shut down at least during the declared emergency period.
Financial Advisors and Economists
People who have substantial assets want to ensure that they're well taken care of, especially during a recession. Financial advisors often see an increase in work as people become concerned about the stability of their investments and seek guidance on how to protect their assets.
When the future of the economy is in doubt, demand for financial and economic advice goes up.
Beyond matters of personal finance, people seek advice and insight regarding current and future economic trends or paths to recovery. Economists often see massive increase in demand for their services and consultants, government policy advisors, and even media personalities as the general public, businesses, and policy makers grapple with the recession.
Auto Repair and Maintenance
In tough economic times, people are less likely to purchase a new car. Instead, they'll repair their old car. Auto repair and maintenance shops rake in the cash during a recession, when people will gladly fork over a few hundred dollars on repairs in order to avoid a monthly payment on a car loan. However there have been counter examples in recent recessions, such as the Cash-for-Clunkers program instituted during the Great Recession, which spurred a modest spike in new car sales.
Home Maintenance Stores (But Not Builders)
Many people will choose a do-it-yourself home renovation or upgrade rather than consider selling and moving during a recession. Depending on credit conditions, borrowing to buy a new home is often not an option for most people during a recession anyway.
Do It Yourself
When economic times are tough, DIY activities of all sorts increase. This effect may be even more pronounced during periods of imposed social distancing and forced business closures.
Companies in the business of providing tools and materials for home improvement, maintenance, and repair projects are likely to see a stable or even increasing demand during a recession, as will many appliance repair service people.
New home builders, though, do not get in on the action. They are among the worst hit as bank lending gets tighter and home sales slump.
Home Staging Experts
It is more difficult to sell a home during a recession, but some people have to do it. People who specialize in home staging thrive as the housing market becomes increasingly competitive.
Home staging specialists might be real estate agents or interior design professionals, or both. A staging expert increases the appeal of a home by furnishing and decorating it to look its best to appeal to potential buyers.
Rental Agents and Property Management Companies
People who may not be able to afford to buy a home during a recession, and people who were forced to sell for financial reasons, still need a place to live. The answer for many, at least short-term, is a rental.
Recessions also often lead to an increase of shared living arrangements and people moving in with parents or extended family members.
Rental agents, landlords, and property management companies can thrive during a recession when renting is likely to become a more appealing option, if not the only one available.
For many, dining out during a recession starts looking like an extravagance. Supermarkets often see an increase in sales as people choose to cook more meals at home and even entertain their friends at home more often.
During the 2020 Covid-19 lockdowns, restaurants have been forced to close or curtail operations to pick-up and delivery service only. Grocery store on the other hand have been designated essential businesses and have seen a surge in activity as consumers stock up on essential staples in anticipation of quarantines and shift toward home prepared meals.
Bargain and Discount Stores
People cut back on luxuries during a recession but that doesn't mean they never buy anything that isn't strictly necessary. There's even a tongue-in-cheek economic theory called the Lipstick Index that argues that sales of cosmetics will always rise during bad times because they're a relatively affordable luxury.
That said, a great variety of other cheap thrills can be purchased at bargain and discount stores. People who otherwise never step into a dollar store rethink their shopping habits when a recession hits.