There's been a lot of debate lately over whether the U.S. will plunge into a recession soon. While a downturn isn't inevitable, many economic forecasters believe it's just a matter of time before a recession hits.
"The worst is yet to come, and for many people, 2023 will feel like a recession," the International Monetary Fund Oct. 11 report warned.
Inflation continues to soar, causing chaos in the stock market, and companies are bracing for an uncertain future with layoffs, hiring freezes and, in some extreme cases, rescinding job offers.
With recession fears looming, working professionals across the U.S. are worried about their future employment status: Nearly 40% of workers are worried about their job security heading into a potential recession, according to an August Bankrate survey of 2,458 U.S. adults.
While no job is completely immune to economic headwinds, some industries tend to fare worse than others during a downturn.
CNBC Make It asked three economists which industries they expect will be the most vulnerable during the next economic downturn.
The riskiest industries to work in include:
- Real estate
- Construction
- Manufacturing
- Retail
- Leisure and hospitality
The jobs that are the "first to go" when a recession hits are the ones that depend on consumer spending and people having copious disposable income, says Kory Kantenga, a senior economist at LinkedIn.
Retail, restaurants, hotels and real estate are some of the businesses often hurt during a recession. While such services "may enhance our quality of life, they're not necessary to maintain our basic standard of living," Kantenga says.
Industries that require a lot of capital, such as manufacturing and real estate, also "tend to suffer" during downturns and are less "recession-proof," says Julia Pollak, chief economist at ZipRecruiter. That will be especially true of the next recession, considering the rising interest rates and record-high inflation we're currently seeing, Pollak adds.
Construction and manufacturing experienced sizable dips in employment during the Great Recession, which lasted from 2007 to 2009, according to data from the Bureau of Labor Statistics. Pollak expects that these industries will see similar drops in employment if a recession were to occur soon since people tend to delay big purchases, including new homes and cars, during an economic downturn.
Still, it's hard to confidently predict what will happen during the next economic downturn based on past recessions, says Adam Ozimek, chief economist at the Economic Innovation Group, a public policy organization that researches economic issues.
"This is a really bizarre economy," he says. "We're off the map in a lot of ways, because it's been a long time since we've had an economy this overheated and especially one that still has a lot of supply-side constraints … I'm not sure past history is going to be much of a useful guide to us."
Ozimek is optimistic that the Federal Reserve can reduce inflation and slow economic growth without triggering a recession and high unemployment, pointing to 2018 as a time the Fed raised interest rates and engineered a cooling of the economy that didn't result in a recession.
"I don't think it's time to panic yet," he says. "The risk of a recession is real, but I think there's also a really good chance we don't have a recession at all."
Check out:
Here's how you can recession-proof your career, according to one CEO
The 4 most 'recession-proof' industries to work in, according to economists
5 recession-proof jobs with 'consistently high' demand, according to economists
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