I'm an Economist: 5 Industries That Will Be Hit Hard During the Next Recession
The next recession could come immediately — or not for another five years. The old joke goes that economists have predicted nine of the last three recessions, but sooner or later, downturns always arrive.
So which industries will be hit hardest next time, according to economists?
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Retail
The retail industry is already showing signs of stress. The U.S. Census Bureau reported retail sales stalled in December, with no growth, while revising October sales downward.
Economics professor David Smith of Pepperdine University points to a weakening labor market and softer consumer spending, combined with higher wholesale costs due to tariffs.
“Retailers are experiencing reduced pricing power, even as their costs rise due to tariffs,” he said.
That doesn’t bode well if the economy slips into a recession.
Hospitality
The same weakening labor market has dampened consumer sentiment and spending. In late January, the Conference Board reported the lowest consumer confidence levels since 2014.
“When consumers lack confidence, they slow their spending now in anticipation of needing to save more,” said economist Rebecca Homkes.
Construction
Construction companies tend to scale back building during recessions as real estate demand declines.
“A reduction in the supply of foreign-born labor — who historically represent a quarter of the construction workforce — has pushed labor costs upward,” Smith added. “Meanwhile, new tariffs on construction materials have driven up builders’ costs.”
Don’t expect laid-off white-collar workers to fill that labor gap, either.
Professional Services
Speaking of unemployed software engineers, economist Jay Zigmont of Childfree Trust sees a wave of layoffs coming for white-collar workers.
“When times get tough, AI agents will replace humans at a record pace,” he said.
“Unlike past recessions, companies won’t rehire once conditions improve. These jobs may disappear permanently as companies compare the effectiveness of AI against a human who costs 10 times more.”
Vulnerable workers include software developers, web designers, graphic designers, marketers, content creators and data analysts — along with many other digital roles.
Financial Services
That impact could extend to financial analysts as well.
Beyond workers, banks and other financial firms may also struggle in the next downturn.
“As the labor market cools and unemployment ticks upward, banks are bracing for higher defaults on consumer credit and mortgages,” Smith said. “This has led to tighter credit conditions, which could accelerate an economic downturn.”
Already, total household credit card and mortgage debt have reached record highs, according to the Federal Reserve. Even more concerning, delinquencies for both debt types have steadily risen over the past five years.
When the next recession hits, don’t expect a mild blip — it could feel more like a hurricane.
This article was provided by MoneyLion.com for informational purposes only and should not be construed as financial, legal or tax advice.
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