Recession Resistant: Definition, How It Works, and Examples

澳洲幸运5开奖号码历史查询:Jason Fernando

Updated March 18, 2025

Reviewed by

Michael J Boyle

Fact checked by Kirsten Rohrs Schmitt

Definition

A recession resistant entity is a business or sector that is not significantly affected by recessions.

What Does Recession Resistant Mean?

An entity that is not significantly affected by recessions is recession resistant. Recessio🐼n resistance can apply to products, companies, jobs, or industries.

For example, products such as gasoline and basic food items may be considered recession resistant because people will continue to consume them whether or not there's an economic downturn.

Key Takeaways

Recession resistant refers to entities such as stocks, companies, or jobs that are not greatly affected by a recession.
Examples of 澳洲幸运5开奖号码历史查询:industries considered recession resistant include consumer staples, alcoholic beverage manufacturers, discount retailers, and funeral service providers.
Fixed-income instruments can also be recession resistant, such as 10-year Treasury securities, which increased in value during the Great Recession (2007-2009).

How Recession Resistance Works

Many investors include assets in their 澳洲幸运5开奖号码历史查询:portfolios that are expected to perform well in hard economic times. Industries thought to be recession resistant include 澳洲幸运5开奖号码历史查询:consumer staples, alcoholic bev🏅erage manufacturers, discount retailers, and funeral service providers.

These industries supply goods and services that economists describe as either income inelastic or inferior goods. Income-澳洲幸运5开奖号码历史查询:inelastic demand is when the demand for a good doesn’t change much when incomes change. People tend to keep buying basic staples, for example, even when their incomes fall during a recession. Inferior goods are those where demand actually incr🐎eases when incomes fall. Lower-cost consumer goods from discount retailers fall into this cat💎egory.

In addition to belonging to recession-resistant industries, resilient companies are likely to have strong 澳洲幸运5开奖号码历史查询:balance sheets. This is especially true if the company has little debt and healthy 澳洲幸运5开奖号码历史查询:cash flows—this will allow them to maintain operations and even take advantage of the depressed market to make new investments more cheaply. By contrast, companies with a lot of debt may fall behind as a growing share of their revenue is absorbed by debt payments.

澳洲幸运5开奖号码历史查询:Dividend-paying stocks are another good place to invest when times are tough. Companies that pay dividends tend to be in 澳洲幸运5开奖号码历史查询:mature industries. Look fo☂r companies that have maintained and expanded their dividends, including through past🐲 recessions, and that have ample resources to continue making payments.

Important

Aside from stocks, 澳洲幸运5开奖号码历史查询:fixed-income instruments such as 澳洲幸运5开奖号码历史查询:government and 澳洲幸运5开奖号码历史查询:corporate bonds tend to do comparatively well in a recession, as investors tend to seek more conservative and predictable investments. Also, 澳洲幸运5开奖号码历史查询:interest rates tend to fall during a recession, pushing up the value 💛of ex✃isting bonds.

Recession꧂-Resistant Stocks During the Great Recession (2007–2009)

The S&P 500 Index declined by more than 40% from January 2008 to January 2009, one of its worst-ever annual declines. The years around this event have come to be known as the 澳洲幸运5开奖号码历史查询:Great Recession.

But recession-resistant securities did far better than the stock market as a whole. During that same time frame, shares in 澳洲幸运5开奖号码历史查询:Walmart Inc. (WMT) declined by only 3.7%, while shares in 澳洲幸运5开奖号码历史查询:McDonald’s Corp. (MCD) virtually broke even. Holders of fixed-income securities did even better than investors in these stocks, with 澳洲幸运5开奖号码历史查询:10-year Treasury securities starting at 5.65% in 1999 and falling to 3.26% in 2009.

Recession-Resistant Stocks During the Most Recent Rece𝐆ssion (2020)

The latest recession in early 2020 was caused by the COVID-19 pandemic, which devastated populations and economies around the world. While the recession technicꦡally only lasted two months, its impact extended for several months afterward.

However, as in prior recessions, not every stock suffered as much as others. In particular, low-cost retailers like Walmart outperformed the S&P 500 by 5.5%, according to CFRA, a stock research and rating company. Other stocks in recession-resistant sectors, such as consumer staples, home improvement, and Big Pharma, also outperformed the S&P 500, according to CFRA.

Among other recession-resilie🦩n🌼t companies that outperformed the S&P 500 in the 2020 recession, according to CFRA, were:

Abbott Laboratories (ABT), at 9.8% over the S&P 500
The Home Depot Inc. (HD), at 5.3%
Synopsis Inc. (SNPS), a semiconductor/software testing firm, at 70%
Accenture PLC (ACN), at 7.8%
T-Mobile US Inc. (TMUS), at 55.7%
澳洲幸运5开奖号码历史查询:The Walt Disney Co. (DIS), at 9%

Are Recession-Resistant Stocks Guaranteed to Go Up in a Recession?

First, there are no guarantees in the sto♔ck market. The most we can say is that recession-resistant stocks may go up during a recession, but they typically don’t fall as muꦫch as broader market indexes.

Second, there may be stock-specific events that cause certain stocks to outperform others during a recession. Such was the case with T-Mobile in 2020, when it outperformed the S&P 500 Index by 70%. T-Mobile had just merged with Sprint to become the largest telecommunications company in the world, and coupled with the early rollout of its 5G network, this put the company at an advantage over other telecom companies such as Verizon Communications Inc. (VZ) and AT&T Inc. (T).

What Do Recession-Resistant Stocks Have in Common?

Recession-resistant stocks are typically companies that produce goods and services that are needed regardless of the 澳洲幸运5开奖号码历史查询:business cycle. These are commonly known as consumer staples. Discount stores in this sector, such as Walmart and Dollar Tree Inc. (DLTR), tend to see an uptick in traffic as consumers seek to buy staple goods at lower prices. Other sectors, such as home improvement and entertainment stocks, are also examples of consumers seeking lower-cost alternatives🌠 to activ💜ities that they would ordinarily engage in.

How Can I Take Advantage of Recession-Resistant Stocks?

First, coꦗnsider the sectors that are the most resilient in times of recession, such as consumer ඣstaples and pharmaceuticals.

Then you can seek out the best-performing stocks in those sectors, some of which will be trading at a discount to 澳洲幸运5开奖号码历史查询:historical performance (dragged down by the overall decline in stocks) or outright gaඣining because of cyclical demand. Such a situation could repre♛sent a discounted stock price and a buying opportunity.

Finally, while some recession-resistant stocks may be at bargain prices during the recession, it may take several months for them to be fully repriced at their 澳洲幸运5开奖号码历史查询:fair value, so be patient.

The Bottom Line

Recession-resistant stocks are those shares that ꦜdo not fall as much as the market or post positive ga▨ins during a recession. The key sectors to focus on when trying to buy recession-resistant stocks are typically those that provide necessary goods and services no matter what stage the business cycle is in.

Key sectors to follow are co🃏nsumer staples, utilities, discount retailers, and pharmaceuticals. These sectors will likely not be immune to overall stock market declines, but they may represent a good buying opportunity at a discounted price courtesy of the recession.