During a recession, consumer spending typically shifts towards necessities, making consumer staple stocks more resilient as these companies produce goods that are essential for daily life. This is why they are expected to perform relatively well, as consumers continue to purchase these items despite economic downturns.

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During a Recession

Question 58

Multiple Choice

During a recession,

A) financial stock rise on expectations of increases in loan demand, housing constructions and security offerings.
B) consumer durable stocks rise on expectations of rising consumer confidence and personal income.
C) capital goods stocks rise on expectation of increases in business capital spending.
D) basic materials stocks rise on expectation of rising profit margins.
E) consumer staple stocks rise on expectations that consumers will continue to spend on necessities.

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