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consumers: which jobs are they creating?, Recall that employment tied to each GDP component equals direct plus indirect employment. The National Bureau of Economic Research (NBER) is the official arbiter of recessions. 7 See Mariacristina De Nardi, Eric French, and David Benson, Consumption and the Great Recession, NBER working paper 17688 (Washington, DC: National Bureau of Economic Research, December 2011) and endnote 2. This section analyzes PCE-related employment at the major sector and detailed industry levels, including the most consumer-dependent industries, from 2007 through 2012. Will they continue to support the majority of U.S. jobs? Consumer spending: past and present Summary written by: Demetrio Scopelliti Like capital investment, consumer spending has a significant role in driving economic growth. Direct employment is employment in industries that produce final goods or services. Western Information Office (In contrast, employment levels increased (or decreased) the same year that output levels did for the investment, export, and government sectors in the Great Recession.) Overview of Spending Entertainment expenditures, which tend to be more discretionary, fell 7.0 percent in 2010, the most in percent-age terms of any category. Economic growth, rising home values and equity, easy credit, and declining personal savings rates also prompted higher consumer spending, supplemented by baby boomers reaching their highest earning years.27 The 2001 recession and its lingering effects briefly tempered consumer spending, but growth rates rose again as Americans spent more on durable household items, new technology, and vehicles as the housing bubble peaked in 2005.28. During the Great Recession, which took place from late-2007 through mid-2009, the economy steeply contracted and nearly 8.7 million jobs were lost.6 Consumer spending experienced the most severe decline since World War II.7Households cut spending, shed outstanding debt, and increased their rate of personal savings in response to reductions in income, wealth, confidence, and credit access.8, With persistently high unemployment rates, the weak revival in job growth has been one of the most debated aspects of the recent recession.9 Several structural and cyclical factors have been proposed as causes, including the nature of the financial crisis, dependency of the economy on services, economic and policy uncertainty, extended unemployment insurance, and high long-term unemployment rates.10 Many have also blamed sluggish consumer spending: as Federal Reserve Chairman Ben Bernanke stated in 2011, Consumer behavior has both reflected and contributed to the slow pace of recovery.11 Others made stark statements, such as, Don't expect [U.S.] consumer spending to be the engine of economic growth it once was.12, Using an inputoutput methodology, this article estimates U.S. employment related to each final demand component in the latest recession (20072009) and during the recovery years through 2012, with a focus on consumer spending. State and local government employment related to consumers grew 2.0 percent by adding 36,700 jobs. Between 1993 and 2007, PCE grew 3.5 percent annually while PCE-related employment grew 1.5 percent annually. All of the industries with the largest job declines were servicessuch as trade, finance, information services, and food serviceswith the exception of printing and related support activities. Before sharing sensitive information, The recession had a disproportionate impact on goods-producing industries: although less than 10 percent of PCE-related jobs are involved in making goods, these industries represented 39.2 percent of consumer spendingrelated job reductions between 2007 and 2010. After federal governmentrelated employment increases are excluded, a total 8.7 million35 jobs were lost between 2007 and 2010. Exports have been a bright spot in the U.S. economy in recent years, and the only net annual job declines for export-related employment occurred in 2009. Manufacturing jobs related to U.S. consumption declined by over 1.1 million, while professional and business services declined by 889,500. At that time, 85.1 million jobs61.5 percent of total U.S. employmentrelated to consumer spending (see figures 23 and table 3). Personal consumption expenditures as a percent of GDP, 19602012 and 2022 projected, Figure 2. 2009); Martha L. Olney and Aaron Pacitti, Goods, services, and the pace of economic recovery,. The BLS survey on consumer expenditures illustrates just how much spending patterns have changed during this historic period. PCE-related manufacturing jobs alone declined by 414,400. Just over half of the most consumer-dependent industries gained jobs between 2007 and 2010, many because they are in the health care and education fields. A similar number of consumer-related jobs in goods-producing industries were lost (a decline of 523,000 jobs) as service-providing ones (a 467,000 decline) in 2010 (see table 4). Authors estimation with methodology used in Mayerhauser, Inside look at U.S. Consumers. Use of older BEA data to be consistent with BLS employment projections leads to slightly different 2012 estimates than in Mayerhauser. As for services, wholesale trade was particularly affected, with PCE-related employment decreasing by 8 percent (266,700 jobs). PCE-related employment by detailed industry: Table 5 shows the detailed industries with the top 10 largest and most rapid consumer-related employment declines from 2007 to 2010. In 2011 overall employment increased by 1.6 million jobs or 1.3 percent, well below the job growth following other recessions and slower than PCE-related gains. Americans Spent More on Taxes Last Year Than on Personal Necessities With the revision, consumer spending as a percentage of GDP is now slightly lower. U.S. Bureau of Labor Statistics Consumer Expenditure Surveys PSB Suite 3985 2 Massachusetts Avenue NE Washington, . Consumer Spending Shifts For H2 2023: Services Cruising Through The relative stability also reflects the positive performance of specific sectors for PCE-related employment in the recession, as is discussed in the next section. More BLS articles and information related to consumer prices and spending are available online at the following links: Average Food Prices: A snapshot of how much has changed over century. Employment related to personal consumption expenditures as a percentage of U.S. nonagricultural wage-and-salary employment, 19932012 and 2022 projected, Table 1. Chicago Booth paper no. To be consistent with data used for the 20122022 employment projections, BEAs March 2013 data are used for the rest of this paper. In total, more goods-producing jobs tied to consumption were lost than service-providing jobs in 2010. Consumer expenditures in 2020 Consumer Expenditures in 2020 will highlight spending patterns and expenditure changes for 2020, the most recent data processed by the U.S. Bureau of Labor Statistics (BLS) Consumer Expenditure Surveys (CE). Federal governmentrelated employment began to decline from its 2010 peak, while export-related employment reached 2007 levels. Because the majority of jobs in serviceswhich are expected to account for over 90 percent of new job growthrelate to PCE,49 consumers are projected to remain a stable and important force in the economy through 2022. Average annual expenditures varied widely in 2021 among eight selected metropolitan areas, ranging from $415 for the average consumer unit in Atlanta to $1,252 for the average consumer unit in New York. The latter type of employment, called induced employment, is not measured by BLS. Excluding government-related employment gains, lower consumer spending was associated with one-third of the 6.6-million job decrease in 2009. But in 2009, the worst year of the recession, PCE-related employment increased to 63 percent of U.S. employment and then rose again in 2011 and 2012 as investment-related employment remained near historic lows and government-related employment began to decline (see table 3). The U.S. economy to 2022: settling into a new normal, Labor force projections to 2022: the labor force participation rate continues to fall, Industry employment and output projections to 2022. . De Nardi, French, and Benson, Consumption and the Great Recession., National postsecondary enrollment trends: before, during, and after the Great Recession, , National Student Clearinghouse Research Center and Project on Academic Success, Indiana University. See Mariacristina De Nardi, Eric French, and David Benson, Consumption and the Great Recession, NBER working paper 17688 (Washington, DC: National Bureau of Economic Research, December 2011) and endnote 2. 16 The 8.7-million job decrease between 2007 and 2010 is calculated on an annual basis and does not include federal government-related employment increases. Health insurance paid by third parties is not included in health care consumer spending, but is included in consumer spending on financial activities. As for sectors that did not recover, in 2012 PCE-related wholesale trade jobs remained 235,000 jobs below 2007 levels, while PCE-related employment in retail trade had 58,000 fewer jobs than in 2007 . With changing demographics, the impact of the 20072009 recession, and increasing global exchange and growth, some wonder if U.S. consumers will be an engine for economic growth in the future. Furthermore, the larger percentage of PCE-related employment as a share of all employment underscores the severity of the recession. Like PCE, employment related to PCE is projected to grow slower than it did prior to the latest recession. BLS Data Finder 19 Calculated using the method described in endnote 16 to estimate monthly employment, April 2014 total nonagricultural wage and salary employment was 139.1 million, approximately equal to December 2007. In the latest recession, employment supported by U.S. consumer spending declined by an estimated 3.2 million jobs between 2007 and 2010, over a third of total job declines during that time frame. October 2014, https://doi.org/10.21916/mlr.2014.34. In 2007, which was the business cycle peak prior to the latest economic downturn, 85.1 million nonagricultural wage and salary jobs related to consumer spending; these jobs were 61.5 percent of total nonagricultural wage and salary employment in the United States5(see figure 2). Here is how you know. In 2009 consumers spent just under $9.0 trillion in the second quarter, the last official quarter of the recession. According to the Interview Survey, the average annual mean expenditure for all consumer units was $498.59, with an average quarterly percent reporting of 0.38. Note that investment, exports, and government-related employment experienced peaks and troughs at different times than PCEhence why job declines by component for 20072010 differ from their respective individual peak-to-trough declines. Because of its cyclical nature, investment-related employment experienced much larger and more rapid declines than all other sectors of the economy: between its peak and trough (20062009), investment-related employment fell 31.2 percent, a reduction of 5.5 million jobs. This article is arranged in the following manner: the first section reviews the methodology to translate consumer spending to employment using the inputoutput system, while the second section goes over prerecession consumption and employment trends. In 2012 PCE-related employment finally recovered recessionary losses (see figure 8). The monthly figure is calculated using total nonfarm payroll employment plus private household employment less logging. Industries most dependent on consumer spending, Figure 11. Between 2012 and 2022, PCE-related employment is projected to grow 1.0 percent annually, slower than the 1.5 percent for 19932007 and the 1.1 percent for 20022007. PCE-related employment also declined by 614,800 for retail trade (4.3 percent), 431,000 for financial activities (6.2 percent), and 358,700 for wholesale trade (10.4 percent).40. In 2012, 68.7 percent of services jobs were consumer-related. Regional Commissioner William J. Sibley noted that this figure was significantly higher than the $64,187 average expenditure level for households in the United States. Distribution of 20072010 job loss by final demand component, Table 5. 20 See Chapter 5 of Concepts and methods and Nicole Mayerhauser of the Bureau of Economic Analysis, Inside look at U.S. consumers, Washington Journal (CSPAN, December 27, 2013). But as consumer expenditures on traditionally labor-intensive services like health care continue to grow, 63.2 percent of jobs in the U.S. economy are expected to relate to consumption in 2022; this percentage is within the stable historic range (see figure 3). 4 The terms consumer-supported or consumer-related employment are preferred to consumer-generated employment in this paper, in contrast to past BLS publications. Consumer spending slowly recovered through 2010 after bottoming out in the second quarter of 2009. Yikes. With the exception of beverage manufacturing, the last in the ranking, all industries most dependent on consumers were service-providing industries. See methodology section for more details. 15 BLS projections cover a 10-year period. Contact author for PCE-related employment data dating back to 1993. The U.S. economy to 2022: settling into a new normal, Monthly Labor Review, December 2013. Measure Category: Consumer Spending X Measure Category: Consumer Assets and Liabilities X + Mortgage principal paid, owned property by Income Range: $150,000 to $199,999 . More detailed data on what people buy is released annually. Health care and social assistance jobs alone are anticipated to account for more than half of the total PCE-related employment gains between 2012 and 2022. See. 10 For example, see Carmen M. Reinhart and Kenneth S. Rogoff, The aftermath of financial crises, NBER working paper no. Locate and notify customers of delinquent accounts by mail, telephone, or personal visit to solicit payment. Consumer spending also plays a prominent role in 4 of the top 10 industries projected to experience the fastest growth through 2022, as seen in table 8. In the last quarter of 2007, the first official quarter of the recession, consumer spending peaked at $9.3 trillion (see figure 6). Furthermore, by definition PCE includes other expenditures, such as employer contributions for health insurance and workers compensation, imputed rent of owner-occupied housing, indirect financial services, in-kind social benefits, and expenses for pensions and life insurance.20 BLS uses annual PCE data from the National Income and Product Accounts published by the Bureau of Economic Analysis (BEA). Unfortunately, the CE does not measure household spending at the state level, so our analysis instead relies on state-level personal consumption expenditures (PCE) reported by the Bureau of Economic Analysis (BEA). Employment related to each gross domestic product component, 20072012 and projected 2022, Figure 6. Featured LAU Searchable Databases. Between 1993 and 2007, consumer-related employment fluctuated between 60 and 62 percent of total employmentat the lower end of the historic range dating to the late 1970swhen the percentage of investment-related employment increased to fuel economic expansion. 29 See Toossi, Consumer spending, and Janet Pfleeger, U.S. And many companies that depend on consumer spending - particularly those in the apparel and accessories industry - are forecasting a . Consumer spending during the asset boom,. See chapter 5 of, Concepts and methods of the U.S. National Income and Product Accounts. Tables 2 and 3 document output and employment levels in the recession tied to each final demand component, as well as showing projections to 2022.30, 31 Even though the recession ended in 2009, employment changes for the 20072010 time period are included in table 3 because overall employment levels peaked in 2007 and troughed in 2010.