Academic journal article Monthly Labor Review

Consumer Spending: An Engine for U.S. Job Growth; Personal Consumption Expenditures Continue to Account for More Than 60 Percent of Total Employment in the U.S. Economy, with Consumers Increasingly Shifting Their Purchases to a Sophisticated Array of Personal Services. (Consumer Spending and U.S. Growth)

Academic journal article Monthly Labor Review

Consumer Spending: An Engine for U.S. Job Growth; Personal Consumption Expenditures Continue to Account for More Than 60 Percent of Total Employment in the U.S. Economy, with Consumers Increasingly Shifting Their Purchases to a Sophisticated Array of Personal Services. (Consumer Spending and U.S. Growth)

Article excerpt

Consumer decisions about what to buy, how much to buy, and when to buy from the myriad of goods and services that are available today not only satisfy their own needs, but also determine how much of which goods and services ultimately will be produced. The production of these goods and services creates jobs in all sectors of the economy. Some of the jobs that are created are the direct result of production in industries that produce goods and services to meet consumer demands (final goods), and the rest are generated in industries that provide inputs for the production of final goods and services (intermediate goods). Whether employment is generated in the final-goods industries or in related intermediate industries, it originates from consumer choices and reflects the wishes of those consumers. Each component of gross domestic product (GDP), which consists of personal consumption expenditures, investments, exports, and government expenditures, contributes in varying degrees to the level and distribution of output and employment. Personal consumption expenditures, accounting for the largest share of GDP, are the main generator of employment in the economy. (1)

In 2000, employment generated by consumer spending was 83.2 million, accounting for 62 percent of total employment in the economy. Consumer spending is projected to add 11.3 million net new jobs by 2010, so that total employment resulting from consumer spending will reach 94.5 million, or 61 percent of all employment that year. The annual growth rate of employment generated by consumer spending is projected to be 1.3 percent, considerably less than the 1.8-percent growth rate during 19902000.

From 2000 to 2010, as in the previous decade, virtually all nonfarm wage and salary employment growth is expected to be in the service-producing sector. Despite continued strong output growth resulting from consumer expenditures for durable goods, the goods-producing sector is, in fact, anticipated to lose employment, because growth in the demand for intermediate and final goods in that sector is concentrated in industries with high productivity increases.

Within the service-producing sector, the services industry is expected to have the highest growth rate, accounting for a net increase of 8.9 million jobs during 2000-10. The next-largest providers of employment are the retail trade and wholesale trade industries, which are projected to add another 2.0 million jobs. These two industry groups combined are projected to generate about 97 percent of the total increase in the nonfarm wage and salary jobs over the projection period.

In addition to providing an estimate of employment related to consumer spending by industry, this article presents estimates of changing occupational demand due to changes in personal consumption expenditures. The growth of various occupations depends primarily on the growth of industries in which those occupations are concentrated. In conformity with past trends, two major occupational groups--professional and related occupations, and service occupations--are projected to be the fastest growing, accounting for about 7.9 million jobs. These two major occupational groups will likely be responsible for more than 70 percent of the total increase in jobs over the 2000-10 period.

Methodology

The main focus of this article is to measure the domestic employment generated by consumer spending on domestically produced goods and services. That aim is part of an effort by the BLS Office of Occupational Statistics and Employment Projections to carry out medium-term economic projections of industrial and occupational employment every 2 years. The projection process involves forecasting GDP (sales to final purchasers), measuring the industrial outputs and employment generated by those sales, and converting the employment figures to occupational estimates through the use of an industry-occupation matrix. …

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