At just a glance, today’s outlook on the economy looks stressed but you really have to keep two things in mind. Is the economy down because of a recession? Or is it an effect of the Coronavirus?
Either way, these are hard economic times not just in the US but globally things seemed to have come to a screeching halt.
You would also be very hard-pressed to find someone or some business that is not being overshadowed by the economic reaper as the word gets out to basically shut down and stay home.
Regardless of the situation, life goes on.
But some recession forecasts proliferate, it is not necessarily true that all areas will be hit equally hard. We are a large nation that is made up of diverse places and varied local economies.
The landscape of highly exposed industries makes it crystal clear that the economic toll of any coming recession will hit different regions in disparate, uneven ways.
In other words, the hardest-hit areas will be in large metropolitan areas rather than rural ones.
There are some industries that seem to do quite well or that they fare better than others during a recession. No matter what causes it, the hardest hit industries are some of the most diverse industries in the US.
Here are the 5 industries that will suffer the most during a recession.
1. Building Material and Supply Dealers
This should be rather obvious. No money, no building going on. Fewer jobs from contractors boil down to slower markets for lumber, plumbing, electrical, etc. A crew building the average house in the average neighborhood shops at several different places during a normal day. From plumbing and electrical and drywall suppliers to local mom and pop stores where those same crews buy gasoline and snacks.
This is one industry that drives several more and by a turndown in their business, several other businesses may fall victim to the recession.
2. Home Furnishing Stores
Again, if there are no houses being built, then there is no need for the furniture to go in them. Or say one of the breadwinners of the family just got pink-slipped. That new expensive refrigerator now takes a back seat to other things like mortgage payments and utilities, and adding on that man cave is now so far out of reach, might as well forget about it.
This just goes to show that industries that are not in the same supply chain do not operate in a vacuum. A slow down in construction hurts many other industries other than just construction.
3. Motor Vehicle Industry
This industry’s economic indicators are to that of the construction industry…people just do not want to be shelling out money, bottom line. Consumers will either delay or totally pass on big-ticket items when in the face of a recession.
And as with construction, a drop in motor vehicle sales means less gasoline. Oil, tires, repair services, insurance, and so on.
4. Office Supplies, Stationary, and Gift Stores
Retailers take a big hit during a recession when all of those wallets slam shut and start to gather dust. This includes retailers selling moderately priced items like school and office supplies.
As with building, the decline in business activity reduces the number of supplies needed possibly due to cutbacks as everyone tries to cut their budget. And when the workforce moves toward more work from home status this will affect the traditional type offices where business is conducted. The traditional 9 to 5 workplace may be in jeopardy with this current state of affairs, and all of those offices right along with it.
5. Travel, Accommodations, and Hospitality
When there is less money floating around, one of the first casualties for consumers is the travel budget. This means that the hotels and motels will see a drastic drop in the number of people checking in. The consumer may not even wish to reschedule an upcoming trip for fear of what the economic forecast is. And travelers may opt for a less pricey hotel or at the very least cut out the amenities.
As with all of the above industry, the way that this has an effect on other businesses is cause to make one realize that we are indeed in a time of economic hardship.
This should give a better picture of how everyone suffers in one way or another during a recession. One business slowing down can take a toll on several more that the business feeds off of.
Unemployment is also another big indicator of the economy. In simple terms, no work no jobs. No jobs, no pay. No pay, no spending.
Outcome? More unemployment.
People that are “underwater” in their mortgage are the ones that are paying back way more than the house is worth. If you add that situation with unemployment that creates a very toxic economy.
All of these facts and figures are not meant to scare, they are simply to remind us that recessions are unavoidable and that we all need to be ready for the next one. And not all sectors of industry will suffer the same amount. Be ready for the worst, and hope for the best. That is about the best advice one could be given in these times of the un-predictable road that our economy is about to go through.
As the financial health of consumer-facing industries declines, it’s not only the current employees that will feel the crunch. And whether the blame lies on the recession or on the Coronavirus or maybe a bit of both, it stands to reason that each and every man, woman, and child will somehow be affected by our current situation.
A lot of businesses will need to rebrand or pivot during a recession. You might want to consider redoing your logo and marketing material to attract more customers. Here is a good source if you are interested in making your own logo using a do it yourself logo maker.