"Recession-proof"

The term “Recession-proof” seems to be cropping up more and more these days. It’s been used to describe everything from Tootsie Roll candies to Beyonce’. Few people, however, can really define a recession, and even some economists and legislators are unclear on the term.

Unless we’re clear on what constitutes a “recession” we can’t really understand “recession-proof” either.

A recession is generally understood to describe periods when the economy, defined as Gross Domestic Product (GDP), has flat or negative growth for two or more consecutive quarters. We can then say the economy is in a recessionary trend. If the trend continues long enough, for three or more quarters, then we generally term that as a recession. Sometimes people interchange “recession” with “depression”, which is when the GDP has a greater than 10% decline for more than 3 consecutive quarters.

Humorists have frequently noted that a recession is when your neighbor gets laid off, but a “depression” is when YOU get laid off!

To be “recession-proof” thus means a product, service, or business entity is virtually immune to the negative influences of macro-economic trends. In other words, Tootsie Rolls and Beyonce’ must be immune to negative influences in America’s general economic growth. Few products, services, or business entities can boast of such advantages. Healthcare is an example of a service/product that is “recession-proof” in that rarely can patients forgo the expense when it’s needed. Other business types come very close to recession-proof and are largely unaffected by the general economy. Other products, services and business entities are “counter-cyclical” to the economy and not only behave as if they are “recession-proof,” but may actually increase during downward cycles of the economy. These products, services, or business entities behave in a manner that is nearly the opposite of the general economic trend. In the case of Tootsie Rolls, sugar is a comfort element, and thus when people are generally in some discomfort they turn to comfortable aids – hence Tootsie Rolls is a counter-cyclical product. Movie theaters are booming in our generally recognized recessionary trend now, and also qualify as a counter-cyclical product/service.

So too is the service product of education, including that provided by Access Education. Unlike healthcare, people don’t HAVE to buy education, but during difficult economic times buying education better positions the recipient during the downward economic cycle. Colleges, private vocational, and almost every education sector business is booming now.

The general phrase in use by savvy educators it that “when the economy gets bad, our business gets better!”