Elon Musk now believes that there is a greater than 50-50 chance of the economy going down. Here are 3 simple ways to protect your money

‘Recession is inevitable’: Elon Musk now thinks there is a 50-50 chance that the economy will slow down. Here are 3 simple ways to protect your money

The US economy has made a solid recovery from the COVID-19 pandemic. But according to Tesla CEO and billionaire Elon Musk, the good times may soon be over.

“I think a recession is inevitable at some point,” he said at the Qatar Economic Forum on Tuesday.

As for whether there will be a recession in the near term, that is more likely than not. It’s not certain, but it seems more likely.”

This is not Musk’s first economic warning.

In an email to Tesla executives earlier this month, Musk said he had a “very bad feeling” about the state of the economy and wanted to cut 10% of the company’s workforce.

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We are already in a bear market. If the economy falls into a recession, many stocks may fall further.

The good news? Some sectors are more resistant to recession than others. Here’s a look at three of them.

Consumer Goods

Basic consumer goods are basic products such as foods, beverages, household goods, and hygiene products.

We need these things regardless of how the economy is doing.

If a recession hits the US economy, many companies will likely see their businesses deteriorate. However, we may still see Quaker Oats and Tropicana orange juice – made by PepsiCo (PEP) – on families’ breakfast tables. Meanwhile, Tide and Bounty – popular brands from Procter & Gamble (PG) – will likely remain on the lists from coast to coast.

You can access the collection through ETFs such as Consumer Staples Select Sector SPDR Fund (XLP) and Vanguard Consumer Staples ETF (VDC).

Services

The utilities sector consists of companies that provide electricity, water, natural gas, and other essential services to homes and businesses.

This sector isn’t a fancy one, but it’s recession-resistant: No matter what happens to the economy, people will still need to heat their homes in the winter and turn on the lights at night.

Meanwhile, high barriers to entry protect the profits of established utility companies. Building the infrastructure needed to deliver gas, water, or electricity is very expensive, and the industry is highly regulated by the government.

Thanks to the recurring nature of business, the sector is also known for paying reliable dividends.

If you are looking for the best utilities stocks, the names in Utilities Select Sector SPDR Fund (XLU) provide a good starting point for further research.

Health Care

Health care is a classic example of a defensive sector thanks to its lack of correlation with the vagaries of the economy.

At the same time, the sector offers a lot of potential for long-term growth due to a favorable demographic tailwind – particularly an aging population – and a lot of innovation.

Ordinary investors may find it difficult to choose certain healthcare stocks. But healthcare ETFs can provide a diversified and profitable way to gain exposure to the space.

The Vanguard Health Care ETF (VHT) gives investors ample opportunity for the healthcare sector.

To capitalize on specific sectors in healthcare, investors can search names such as the iShares Biotechnology ETF (IBB) and the iShares US Medical Devices ETF (IHI).

This article provides information only and should not be construed as advice. It is provided without warranty of any kind.

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