We used to build things in America.
Now, we get things for other people who pay us a small fee for the service.
On Friday, we learned that the US economy added 211,000 jobs as the unemployment rate remained unchanged at 5%.
This also marked the 69th consecutive month that the private sector added jobs, a new record.
And most of these jobs have been in the service sector, which accounts for about two-thirds of GDP growth. Manufacturing — which this week gave a pretty clear signal it is in recession — accounts for about 12% of GDP growth, a percentage that has fallen steadily over the last few decades.
The following chart, which comes to us from Deutsche Bank’s Torsten Sløk, shows how employment in goods-producing industries — think construction and manufacturing — has rebounded but been mostly flat since the recession.
Meanwhile service sector employment, which includes a wide range of jobs like waiters, teachers, ad copywriters, and lawyers, has been surging.
Of course, there is a bit of Y-axis shenanigans going on in this chart, but the point is still clearly made: this is a service sector economy, and nothing tells the story quite like the labour market.
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