Major stock indexes plunged into bear market territory in the week starting June 13, 2022, ahead of the Fed’s largest interest rate hike in 28 years, and the gloomy sentiment ushered in waves of layoffs among recently booming technology and real estate companies.
Which Industries are at the Highest Risk if Recession Hits the US?
Despite reeling under the selloff heat in recent weeks, the stock market has plenty of room to fall further before reaching levels consistent with recession-era lows, which would be especially bad for cyclical industries such as travel and hospitality. With high prices deterring consumers from spending, companies tied to discretionary spending such as those in retail, hotels, restaurants, and clothing are at higher risk of a downturn, while those in the tech sector, essentially those tied to the internet, payments, and durable household goods (appliances and computers) could face lesser risk. Restaurants face the highest risk of a pullback in spending as consumers are expected to cut down on dining out. On the contrary, essential items such as gas and groceries are expected to see more resilient spending in spite of driving much of the inflationary gains.
Is the Fed Trying to Catch a Falling Knife?
Despite the Federal Reserve’s hawkish pivot since November 2021, inflationary pressure failed to ease meaningfully and may have worsened. The governments’ efforts to realign demand with depressed supply to rein in price pressure could push the economy into a mild recession. Seeking to quell the increase in living costs, the Federal Reserve accelerated its monetary-tightening campaign in the week ending 17th June, executing the biggest interest-rate hike since 1994. Fed officials unequivocally stated that they will prioritize price stability, the frequently cited “bedrock” of the institution, above all else. President Joe Biden reiterated that a recession in the US is not “inevitable” following a conversation with former Treasury Secretary Lawrence Summers, who sees a significant chance of the country finding itself battling stagflation instead of a full-fledged recession.
Don’t wait - discover a universe of connected data & insights with your next search. Browse over 28M data points across 22 industries.
Access more premium companies when you subscribe to Explorer