Most economists now agree that the worst part of the recession is over, and we’re officially in sluggish recovery mode. No one can say for sure when things will finally return to normal, but enough time has passed that an analysis of the data from the downturn’s lowest point is possible.
For many industries, that point took place in 2009 and 2010. It was a brutal period for most businesses, and many struggled simply to tread water. But others were hit hard, and they offer a unique view into what consumers consider non-essential when times are tough.
Using data provided by the financial information firm Sageworks, CNBC.com shows which industries took the worst beating between 2009 and 2010. Sageworks also provided the insight of analyst Libby Bierman to explain why these industries suffered more than others.
Read ahead to see which industries were hit hardest by the recession.
By Daniel Bukszpan
Posted 1 June 2012
Sales % Change from 2009 to 2010: -0.23%
When there’s less money to go around, one of the first casualties for consumers is the travel budget. This means that hotels and motels would see a sharp drop in the number of people checking in, and this is exactly what happened in the lowest point of the recession.
“Travel accommodation, which includes all sorts of privately owned hotels, saw sales flatline or slightly decrease during the recession,” Bierman said. “Consumers might have taken fewer vacations, and business travelers might have tried to save with cheaper rooms or less amenities.”
Sales % Change from 2009 to 2010: -0.40%
Retailers took a hit during the recession as belts tightened and wallets slammed shut. This includes retailers selling modestly priced necessities like school and office supplies.
“Office supplies, stationery and gift stores saw their average annual sales decline slightly during 2009 and 2010,” Bierman said. “Businesses and consumers alike might have tried to save by reducing purchases at these stores.”
Sales % Change from 2009 to 2010: -0.49%
Industries in this subsector print products like periodicals, books and business cards. They also “perform support activities, such as data imaging, platemaking services and bookbinding," according to the U.S. Census Bureau.
“Printing stores experienced a sales decline during the recession, in 2009 especially,” Bierman said. “It is possible that businesses tried to cut back on expenses like printing when they were forced to cut costs.”
Sales % Change from 2009 to 2010: -0.54%
During an economic downturn, people hold off on making major purchases. Furniture usually falls into that category, and home furniture stores suffered as a result.
Bierman believes that consumer thrift was only one factor. “The sales decline for furniture stores, like with home furnishing stores, could possibly be attributed to the reduced number of new builds during the recession,” she said.
Sales % Change from 2009 to 2010: -1.57%
This industry is involved in the publication of periodicals and books, as well as calendars and greeting cards. It has shown signs of recovery since 2009, but why did the initial decrease occur in the first place?
“The sales decrease among newspaper, periodical, book and directory publishers can’t easily be explained, because in spite of increases in technology and e-readers, this industry has picked up since the recession,” she said.
Sales % Change from 2009 to 2010: -1.67%
One of the hardest-hit sectors during the recession was construction. The halt in new projects and slowing of existing ones produced a domino effect that hurt other industries that are dependent upon it.
“Cement and concrete product manufacturing was another industry that couldn’t escape the downturn in construction,” Bierman said.
Sales % Change from 2009 to 2010: -2.59%
This industry sells RVs, boats, motorcycles and vehicles other than automobiles. As with other major purchases, thrifty consumers simply weren’t willing to shell out money on expensive items such as these while the economic forecast was so uncertain.
“Their sales were down during both 2009 and 2010 possibly because consumers delayed or passed on large-ticket items when jobs or the economy were unstable,” Bierman said.
Sales % Change from 2009 to 2010: -3.07%
This industry includes establishments that sell plywood and bricks, and wholesalers of roofing, siding, and insulation materials. Like the cement and concrete product manufacturing industry, this one is also dependent upon construction projects, and when those came to a grinding halt in 2009, the industry took a major hit.
Bierman agrees that this industry’s dependence on ongoing construction projects was the source of its decreased revenue in 2009 and 2010. “There was obviously a lower demand for lumber and similar supplies when construction was down,” she said.
Sales % Change from 2009 to 2010: -3.27%
When one of the earners in a double income home has just been pink-slipped, certain planned purchases get demoted to the back burner. For example, that luxurious new chandelier suddenly seems much less necessary now that the family is down to one paycheck.
This industry was also affected by the downturn in construction projects. “Since fewer people were building homes during the recession, the retailers that carried household decorations and goods likewise saw a decrease in sales,” Bierman said. ” This just shows that industries—even when they aren’t in the same supply chain—do not operate in a vacuum. The construction lull hurt other industries.”
Sales % Change from 2009 to 2010: -3.28%
“We know that construction projects dipped during the recession, but Sageworks’ data also indicates that tangential industries—like the lumber dealers they work with—also saw sales decrease during both 2009 and 2010,” Bierman said.
“If there are fewer construction projects in progress, contractors would be buying fewer supplies.” This made the building material and supplies dealers industry the hardest hit of the recession.