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Posts tagged with: "USCONS"

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The industrial composition of recessions

Every recession is different, affecting some industries more than others. Analyzing the composition of the recession may reveal how the recovery from the recession may progress, as jobs in some industries appear easier to fill than jobs in other industries. The recession that followed the Great Financial Crisis (GFC) resulted in a substantial downturn in construction, among other industries. Triggered by lockdowns associated with containing COVID-19, the 2020 recession had substantial effects on the travel and hospitality industries—restaurants, hotels, airlines, etc.

The FRED graphs in this post show employment for four industries in thousands of persons, with the shaded gray bars indicating the period of recession. The first industry—construction—experienced a substantial downturn during and after the GFC, and recovery from that episode was slow. During the COVID-19 recession, however, the downturn in construction was relatively small; as of January 2021, it had recovered about 77% of its employment loss. The other three industries—amusement, gambling, and recreation; accommodation; and food services—experienced relatively small downturns during the GFC recession but very large downturns during the COVID-19 recession. Following the GFC, these industries recovered fairly quickly. Thus, one might infer that, subsequent to the relaxation of COVID-19 restrictions, these industries may recover quickly, thus shortening the duration of the recovery.

How these graphs were created: Search FRED for and select “All Employees, Construction.” Using the blue sliding bar at the bottom of the graph, or the date entry boxes in the top right-hand corner, adjust the timespan to your desired date range. Repeat for the series “All Employees, Amusements, Gambling and Recreation,” “All Employees, Accommodation,” and “All Employees Food Services and Drinking Places.”

Suggested by Julie Bennett and Michael Owyang.

View on FRED, series used in this post: CES7071300001, CES7072100001, CES7072200001, USCONS

Is the decline in manufacturing economically “normal”?

Deciphering the phases of economic development

The FRED graph above tracks the proportions of employees working in three industries—construction, mining and logging, and manufacturing—since 1939. Construction (the blue line) has remained roughly horizontal. Mining and logging (the green line) has steadily declined. And manufacturing (the red line) has noticeably declined as well. This trend may look like weakness for the U.S. economy, but is it something to worry about?

Let’s take a step back: Historically, economic development has led to a declining share of workers in goods-producing sectors. The first sector to decline is agriculture,* whose workers moved to manufacturing and mining during the Industrial Revolution (which pre-dates our graph by a century or so). In the 19th century and beyond, the U.S. economy grew further and progressed to the next phases of development, with mining and manufacturing losing relative importance.

So if the U.S. economy is growing, where is it growing? The graph below shows the service sector has taken up the slack. At the start of the graph, in 1939, this sector had already made up 50% of non-farm employees, and it has continued to grow. The remaining sector, government, has remained relatively flat over the 80 years of this data series. Clearly, the U.S. economy is now much less focused on “making things.” Rather, the emphasis is now on education, health, leisure, retail, information, and finance.

How these graphs were created: Search the Current Employment Statistics release table and choose Table B-1 (seasonally adjusted); select the series you want and click “Add to Graph.” From the “Edit Graph” panel, for each line add series “All employees, non-farm” and apply formula a/b*100.

*Why don’t we show agricultural employment here? For one thing, it’s really hard to count: Many are part-time/seasonal workers and relatives that work on family farms.

Suggested by Christian Zimmermann.

View on FRED, series used in this post: CES0800000001, MANEMP, PAYEMS, USCONS, USGOVT, USMINE

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