The US economy has recovered strongly from the COVID-19 pandemic. But according to Tesla CEO and billionaire Elon Musk, the good times may soon be over.
“I think a recession is inevitable at some point,” he told the Qatar Economic Forum on Tuesday.
“As to whether there is a recession in the short term, it is more likely than not. It is not a certainty, but it seems more likely than not.
This isn’t Musk’s first economic warning.
In an email to Tesla executives earlier this month, Musk said he had a “super bad feeling” about the state of the economy and wanted to cut 10% of the workforce from Tesla. ‘company.
We are already in a bear market. If the economy falls into a recession, many stocks could fall further.
The good news? Some sectors are more resilient to recession than others. Here is an overview of three of them.
Basic consumer goods are essential products such as food and drink, household items and hygiene products.
We need these things no matter how the economy is doing.
If a recession hits the US economy, many businesses are likely to see their business deteriorate. However, we’ll likely still see Quaker Oats and Tropicana orange juice — made by PepsiCo (PEP) — on family breakfast tables. Meanwhile, Tide and Bounty – well-known Procter & Gamble (PG) brands – will likely remain on lists coast to coast.
You can access the group through ETFs like the Consumer Staples Select Sector SPDR Fund (XLP) and the Vanguard Consumer Staples ETF (VDC).
The utilities sector includes companies that provide electricity, water, natural gas and other essential services to homes and businesses.
The industry isn’t glamorous, but it’s recession-proof: no matter what happens to the economy, people will still need to heat their homes in the winter and turn on the lights at night.
Meanwhile, high barriers to entry protect the profits of existing utility companies. Building the infrastructure needed to supply gas, water or electricity is quite expensive and the industry is heavily regulated by the government.
Thanks to the recurring nature of business, the sector is also known to pay reliable dividends.
If you’re looking for the best utility stocks, the names of the Utilities Select Sector SPDR Fund (XLU) are a good starting point for further research.
Healthcare is a classic example of a defensive sector due to its lack of correlation with the ups and downs of the economy.
At the same time, the sector offers great potential for long-term growth due to favorable demographic factors – in particular an aging population – and numerous innovations.
Average investors may find it difficult to pick specific stocks in the healthcare sector. But healthcare ETFs can provide both a diverse and profitable way to gain exposure to the space.
Vanguard Health Care ETF (VHT) offers investors broad exposure to the healthcare sector.
To tap into specific segments of the healthcare industry, investors can look to names like iShares Biotechnology ETF (IBB) and iShares US Medical Devices ETF (IHI).
This article provides information only and should not be construed as advice. It is provided without warranty of any kind.