Which Stocks Actually Survive When the Economy Takes a Dive?

Question

The US economy could be heading for trouble. Wall Street heavyweights like Goldman Sachs and JPMorgan have been waving red flags about recession odds, with estimates ranging from 40% to 60% for 2025. Tariff wars, inflation concerns, and trade tensions are the usual suspects. But here’s the real question: If a downturn hits, which stocks would actually keep their heads above water?

The Defensive Play: What Actually Works

Not all stocks sink equally when recession strikes. History shows us that certain categories tend to be recession-resistant stocks that hold up better than the pack. Think of them as the boring-but-reliable investments that keep paying you even when everything else is falling apart.

Consumer Staples & Everyday Needs

When people tighten their belts, they still need to eat, shower, and do laundry. Companies making food, beverages, and personal care products don’t see demand collapse. These stocks keep the dividends flowing regardless of economic conditions.

Utilities: The Unsexy Winners

Water, electricity, and gas—nobody’s cutting these off when times get tough. Utility stocks have long been written off as “widow and orphan stocks” by traditional brokers, but the data tells a different story. They’ve quietly outpaced the market over decades in ways that surprise most investors.

Healthcare: Recession-Proof Demand

Pharmaceutical companies and medical device makers? People still get sick, still need medicine, still require treatment. Healthcare spending is one of the last things people slash during downturns.

Gold Mining: The Inflation Hedge

When the US dollar weakens (which typically happens during recessions), precious metals become attractive. Gold mining stocks and gold ETFs tend to pop when everything else is cratering. The catch? They absolutely stink during bull markets, so they’re really a timing play, not a long-term hold.

The “Small Treat” Theory

Here’s something behavioral economists noticed: During recessions, people massacre their big purchases. Nobody’s buying new houses or cars. But many folks actually increase spending on cheap thrills—entertainment subscriptions, comfort food, fast-food meals. They’re basically rewarding themselves for NOT buying that new Mercedes.

This is why Netflix and Hershey outperformed during the 2007-2009 Great Recession. They’re affordable escapes that people indulge in even when job security feels shaky.

What the 2008 Great Recession Actually Teaches Us

The Great Recession lasted 18 months (late 2007 through mid-2009) and was brutal—the S&P 500 tanked 35.6% including dividends. Yet certain stocks either gained or barely budged.

Winners During the Crash:

Netflix surged 33.3% while the market imploded, then went absolutely nuclear from there (33,280% total return from 2009 to today)
iShares Gold Trust ETF climbed 24.3% during the recession
J&J Snack Foods eked out 18.1% gains
Walmart limped up 7.3%
McDonald’s added 4.7%

The Survivors (Stocks That Fell Less Than the Market):

When recessions hit, not all declines are equal. These stocks dropped but massively beat the market’s 35.6% plunge:

Newmont (world’s largest gold miner): Down only 0.3%
Hershey: Dropped 7.2% vs. market’s 35.6%
Church & Dwight (Arm & Hammer brand): Down 9.6%
American Water Works: Off 12.7%
NextEra Energy: Down 15.7%

The fact that these blue chips fell double-digit percentages but still left the market in the dust tells you everything about how brutal that downturn was.

The Crazy Long-Term Comparisons

Here’s what gets overlooked: Some recession-defensive stocks have quietly beaten tech darlings over the long haul. American Water Works (an unsexy water utility) returned 953% from its 2008 IPO through April 2025. Sound bad? Alphabet (Google) only managed 1,090% over the same period. The boring water company was RIGHT THERE with Big Tech.

Church & Dwight—a household products maker that gets zero financial media coverage—crushed it with 792% returns. Meanwhile, Netflix’s gains dwarf them all at over 33,000%, but Netflix had the advantage of being a disruptive platform, not just a recession play.

The Netflix Wrinkle: Tariffs Don’t Hurt Services

One advantage Netflix has today that didn’t matter during the Great Recession: tariff wars. The current trade tensions hit physical goods—cars, electronics, appliances. But Netflix is a service. US tariffs and retaliatory tariffs don’t touch streaming. This is a crucial distinction when building a recession-resistant portfolio.

The Gold Paradox

Gold mining stocks and gold ETFs are tempting because they pop during recessions. But they’re highly cyclical and volatile. They get hammered during good times. Over the long term, they underperform because you’re basically paying for their recession hedge with years of mediocre returns during bull markets. Leave this to short-term traders, not buy-and-hold investors.

Three Key Takeaways for Your Portfolio

1. Boring Isn’t Bad

Defensive stocks—utilities, consumer staples, healthcare—are unsexy for a reason. They work. Don’t confuse lack of media hype with lack of performance. Some of the best long-term returns come from companies that never make headlines.

2. Recession Odds Are Real, But Don’t Panic Sell

Yes, recession probability is 40-60%. But timing the market is nearly impossible. If you dump your growth stocks to buy defensive plays and miss the early bull market recovery, you’ll regret it. The market’s long-term trajectory is decisively upward. Time is your biggest asset.

3. Defensive Plays Are Portfolio Ballast, Not Wealth Builders

These stocks are insurance. They stabilize your portfolio during downturns but rarely deliver monster gains. A balanced approach—keeping defensive positions while maintaining some growth exposure—beats going all-in on either side.

The Real Strategy

Review your portfolio and add recession-resistant stocks if it makes you sleep better at night. But don’t make wholesale changes. Consider your time horizon. If you’re investing for the next 20 years, a recession is just noise. If you’re retiring in two years, sure, dial up the defensive plays. Stay in the US stock market over the long term—it’s the best wealth-building tool most people have.