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Learn to adapt

Here’s what you should invest in during a recession

Member exclusive by Youyou Zhou for The next recession

When the economy enters a downturn, companies go bankrupt, workers lose their jobs, and households cut spending, demand for most goods looks exactly as you’d expect: It drops.

But there is a category of products, what economists call “inferior goods,” in which people actually spend more money when the economy isn’t doing so hot.

These goods tend to be substitutes for something more expensive. For instance, when families start cooking at home to save money rather than dining out, the demand for groceries rises. In fact, according to a Quartz analysis of US consumer expenditure data, during the last two US recessions in 2001 and 2008, meat from grocery stores was the category in which spending increased 1 the most.

An increase in demand for the 2001 recession is defined as an increase in the category's share of expenditure in 2001 from 2000, followed by a decrease in 2002. A demand increase for the 2008 recession is defined as an increase from 2007 in the category's average share of expenditure in 2008 and 2009, followed by a decrease of the average share of the next three years (2010-2012.)

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