From the course: Economics for Everyone: Understanding a Recession
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Industries most at risk
From the course: Economics for Everyone: Understanding a Recession
Industries most at risk
- A lot of industries are at risk during a recession because most industries, most businesses, do best when the economy is growing. But there are some companies, some industries, that do really well during an expansion when the economy is growing, and they do really poorly when the economy is contracting. When a company does well with an expansion and not good with a recession, it's called procyclical because it goes in the direction of the business cycle. When a company has an extreme reaction to the business cycle up or going down, then it's a very procyclical business. Examples of these would be tourism and travel, leisure, luxury goods. They're things that people don't necessarily need. They're things people want, but they're things people will only buy if they have what's called disposable income, in other words, if their basic necessities aren't a risk. If they have all the money they need for their rent or their…
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