Surviving to Thrive | A 2025 Recession

As the United States faces economic uncertainties in 2025, certain industries are particularly susceptible to the adverse effects of a recession. Understanding these vulnerabilities is crucial for businesses to develop effective strategies to navigate challenging times.

Industries Most Likely to Be Affected by a U.S. Recession in 2025

1. Construction: Highly sensitive to interest rate fluctuations, the construction industry faces increased borrowing costs during economic downturns, leading to reduced demand for new projects. Recent data indicates a sharp decline in new housing starts, suggesting a potential decrease in demand for construction workers.
2. Manufacturing: The manufacturing sector is vulnerable due to its reliance on consumer spending. In March 2025, the Institute for Supply Management’s manufacturing PMI dropped to 49.0, signaling contraction. Factors contributing to this decline include slumping new orders, decreased factory production, and rising input costs.
3.  Transportation and Warehousing: This sector is at high risk during economic downturns as reduced consumer spending leads to decreased demand for transportation services. The industry may experience significant contractions in response to a recession.
4.  Real Estate, Rental & Leasing: Directly tied to housing market performance, this industry is highly sensitive to interest rate increases. Weakness in new and existing housing markets can spread to the labor market, increasing the risk of job losses in this sector.

Retail and Personal Services: Businesses offering discretionary goods and services often see reduced consumer spending during recessions. Industries such as retail, repair, and personal services are at high risk due to their dependence on consumers’ disposable income.

Preparing for a Business Recession

To mitigate the impact of a recession, businesses can adopt several proactive strategies:

• Diversify Revenue Streams: Expanding product or service offerings can reduce reliance on a single income source, providing stability during economic fluctuations.
• Strengthen Financial Reserves: Building cash reserves enables businesses to manage operational costs during periods of reduced revenue, ensuring continuity.
• Optimize Operations: Identifying and eliminating inefficiencies can lower expenses, enhancing overall resilience. Streamlining processes and reducing waste contribute to a leaner operation.
• Maintain Customer Relationships: Engaging with existing customers through loyalty programs and personalized communication fosters retention and sustained revenue.
• Monitor Market Trends: Staying informed about economic indicators and industry developments allows businesses to anticipate changes and adapt strategies accordingly.

Impact on Latino-Owned Businesses

Latino-owned businesses may face unique challenges during a recession. Historically, minority-owned enterprises have been more vulnerable during economic downturns due to factors such as lower levels of capital and concentration in heavily affected industries like retail and hospitality. Additionally, these businesses often operate in communities disproportionately impacted by economic hardships, leading to reduced consumer spending and foot traffic.

To support Latino-owned businesses, targeted assistance programs and equitable distribution of aid are essential. Ensuring access to financial resources and providing support tailored to the specific needs of minority entrepreneurs can help mitigate the disproportionate effects of economic downturns.

By understanding the industries at risk and implementing strategic measures, businesses, including those owned by Latino entrepreneurs, can better navigate the challenges posed by a recession and position themselves for sustained success.

Article sources 
The Conference Board. “Industries That Will Have Most Layoffs in Recession.” Retrieved from conference-board.org
Reuters. “US Manufacturing Slips Back into Contraction as Tariffs Angst Mounts – 2025.” Retrieved from reuters.com
The Conference Board. “Which Industries May Suffer Most in a Downturn? Industry Recession Risk Matrix.” Retrieved from conference-board.org
The Conversation. “Why Black and Hispanic Small Business Owners Have Been So Badly Hit in the Pandemic Recession.” Retrieved from theconversation.com