There is a lot more talk of a recession for Australia right now. Or, at least the chance of a technical recession. A falling housing market, rising mortgage stress and falling construction approvals all point to slower growth in the near future.
The economy only needs two quarters of GDP contraction for it to be called a recession. I think this measure is somewhat flawed – a rising population supports GDP growth considerably. If it was measured as GDP per capita/person it would probably be a more accurate measure.
Anyway, in the event of a recession many sectors often go backwards. Financials like Commonwealth Bank of Australia (ASX: CBA) should fall, discretionary spending businesses like JB Hi-Fi Limited (ASX: JBH) may decline, new car sales would drop off for Automotive Holdings Group Ltd (ASX: AHG) and so on.
But, there are some businesses that historically do better. Gambling shares may get a boost as people roll the dice to try to win big to get out of their recession troubles. That may lead to Crown Resorts Ltd (ASX: CWN) and Tabcorp Holdings Limited (ASX: TAH) seeing an uptick.
A lot of people also have the tendency to eat poorer diets, particularly fast food. If people want a greasy food fix then Collins Foods Ltd (ASX: CKF) and Domino's Pizza Enterprises Ltd. (ASX: DMP) could be in for a boost.
Foolish takeaway
However, it doesn't matter too much to me if a recession happens from the investment side – I invested in my holdings for the long-term, with the expectations that there would be dips along the way.
If a recession does happen then I imagine I will be able to buy some of my shares at attractive beaten-down prices.
