Here Are the 7 Industries Least Likely to Be Hurt by the Next Recession

While no industry is 100% safe from job cuts, The Conference Board -- a business research group -- has identified which industries are expected to experience lower layoff rates during the next recession. Based upon The Conference Board's Job Loss Risk Index, here are the industries best positioned to ride out another economic downturn.

1. Health services and social assistance programs

The need for healthcare systems and social services does not go away during a recession. In fact, there may be even more demand. Even if demand was not enough to save jobs, the severe labor shortages suffered in both of these industries will make it far more difficult to let employees go. Here are two other reasons health services and social assistance programs are at low risk of layoffs:

• Changing demographics -- specifically the aging population -- increases the demand for both healthcare and social services.
• It's difficult and expensive to rehire trained staff once they've been let go.

2. Federal government

Regardless of what's going on, layoffs are rare among federal government agencies. Government jobs are less impacted by temporary economic uncertainty, primarily because the federal government is less sensitive to interest rate fluctuations than traditional businesses are.

3. State and local governments

According to The Conference Board's findings, unless the recession ends up being deep (which is not expected), severe job cuts in state and local governments are unlikely. The fact that both still face recruitment and hiring challenges may help insulate current employees.

4. Private education

Another industry that's not sensitive to interest rate changes is private education. As economic troubles swirl, privately funded schools and universities tend to have more resources available to ride out short-term issues. Privately funded schools prepare for a recession much like the average family; by cutting unnecessary expenses and building a healthy emergency fund.

5. Arts, entertainment, and recreation services

Given how sensitive each of these industries are to interest rate hikes, their relatively high debt-to-equity ratios, and how quickly American families cut discretionary spending during a recession, one might think that layoffs would be rampant in arts, entertainment, and recreation services.

However, according to the Job Loss Risk Index, each is expected to be kept afloat during the next recession by labor shortages. Even now, employment in these industries has not returned to pre-pandemic levels, suggesting employers are too short-staffed to make deep cuts.

6. Retail trade

Another industry that one might expect to be hit hard during a recession is retail. After all, when people are faced with less money in their checking accounts, they're far less likely to buy anything other than necessities.

However, the high quit rate among retail workers and continuous hiring practices by retail establishments indicate that the labor shortage continues. And it's this shortage that is expected to protect existing workers.

7. Accommodation and food services

By the time pandemic-related lockdowns were lifted, accommodation and food service workers were already beginning to leave their jobs, opting to work in better-paying industries. And though we sound like a broken record, the severe labor shortage in this industry is also expected to protect jobs during the next recession.

Options for protecting yourself during a recession

While you may not be able to leave your current job to land a position in a more stable industry, there are things you can do to prepare financially for a recession. Even if your current job remains safe, these steps offer an extra measure of financial security.

• Create a "worst-case scenario" budget. Planning for the worst is not fun, but it does make it easier to manage your finances -- especially when things get tough. Include only the necessities. This is the budget you'll turn to when a recession arrives.
• Until then, cut unnecessary expenses. Run through your monthly expenses to find any that can be reduced or eliminated. For example, you may cut down from four streaming channels to two or buy a meal out once a week instead of two. In other words, find ways to minimize your spending. This will come in handy once a recession settles in.
• Continue to plump your emergency savings account. Even if the most you can contribute a week to an emergency fund is $30 to $40, that's okay. While the ultimate goal is to have enough put away to cover three to six months' worth of expenses, any amount you build up in the meantime can help cover an unexpected bill.
• Shop around for cheaper insurance. Studies show that the average person can shave 19% off their current auto insurance bill by shopping around and switching insurance carriers.
• Switch variable rates to fixed. If you're carrying any debt with a variable interest rate, look into refinancing it to a fixed rate. The last thing you want to deal with during a recession is an interest rate you can't count on to remain steady. One way to switch from a variable rate to a fixed rate is by taking out a personal loan to consolidate debt.

As you've likely noticed, the post-pandemic era has left us with more jobs than workers willing to fill them. While that's bad news for industries desperately in search of labor, it may be good news for existing employees who hope to keep their jobs during a recession.