The U.S. economic recovery was in full swing during the decade following the Great Recession. Before the recent COVID-19 pandemic, jobs were being created by the millions and wage growth was on the rise. What industries propelled America’s self-contained economy?
Below are the five sectors that are have helped fuel the economy’s growth in the wake of the latest economic downturn. The selection is based on data from the Bureau of Labor Statistics (BLS) and industry perspectives.
- Driving the economic growth prior to the COVID-19 pandemic was marked by expansion in health care, notably the growth in health care-related jobs.
- Advances in technology, such as artificial intelligence and machine learning, has helped drive growth in other sectors.
- Other sectors making notable contributions to the economy over the last decade include construction, retail, and non-durable manufacturing.
1. Health Care
The health sector helped the U.S. recover from the 2008 financial crisis. The sector added 2.8 million jobs between 2006 and 2016, which was nearly seven times faster than the overall economy. During the ten years since 2008, the sector has grown jobs 20%, while the average rate for the economy was only 3%. The Bureau of Labor Statistics expects health care jobs to grow at an annualized rate of 18% from 2016 to 2026, much faster than the rate of the rest of the economy.
Healthcare Management, a guide to healthcare degrees for prospective students, says there are four reasons for the booming health care sector. First, an increasingly aging population is creating a need for additional services. Second, chronic conditions suffered by the aging population are increasing the demand for health care workers. Third, medical advances and improvements are expanding the type and number of jobs available. Finally, federal health care insurance reform has increased the number of people seeking routine medical care.
As a share of the nation's gross domestic product (GDP), health spending accounted for 17.7% in 2018. Additionally, investor interest in healthcare and biotech stocks continues.
The tech sector is a huge component of the U.S. economy, according to Cyberstates 2019, an annual analysis of the nation’s industry published by CompTIA. Employment among computer and IT is projected to grow 11% from 2019 to 2029, faster than the average for all occupations. Demand for additional workers is stemming from cloud computing—the collection, and storage of big data and information security.
The impact of the tech industry has affected nearly every state, and, according to Cyberstates 2019, the industry is ranked in the top five economic contributors in 23 states and in the top 10 of 28 states.
Technology plays a role in almost all other sectors, such as health care, advanced manufacturing, transportation, education, and energy. The Internet of Things, artificial intelligence, machine learning, autonomous vehicles, and augmented and virtual reality are all changing society and industries.
Construction has been a growth industry in all areas. This includes residential and nonresidential builders, contractors, and civil engineers. According to the Bureau of Labor Statistics, construction and extraction occupations are projected to grow by 4% from 2019 to 2029, which is nearly as fast as the average for all occupations. The growth is, in part, being driven by population growth, which is increasing demand for new buildings, roads, and other structures.
Construction spending hit an annual rate of $1.365 trillion during 2019, according to data from the Census Bureau.
The retail trade accounts for 5.5% of the nation's GDP, providing 9.6% of total employment in the U.S., according to the Bureau of Labor Statistics.
The National Retail Federation (NRF) notes that retail supports more than one-in-four U.S. jobs—or 52 million working Americans—and because the sector's employment rate has improved, retailers have less of a need to hire seasonal workers.
The sector includes online retailers such as Amazon (AMZN) and eBay (EBAY), aw well as brick-and-mortar establishments. The NRF reported a 4.1% increase in retail holiday sales during November and December of 2019 compared to the same period in 2018.
5. Non-durable Manufacturing
The non-durable manufacturing industry produces commodities that are defined as having a lifespan of less than three years, such as gasoline, electricity, and clothing.
Non-durable manufacturing is a predominant pillar in the U.S. with a GDP value-added that's 4.8% of the national GDP, according to the Federal Reserve. The non-durable manufacturing sector is less valuable than durable manufacturing; however, it employs more people and accounts for 4.4 million jobs compared to 349,000 jobs from durable manufacturing.
The MAPI Foundation suggests annual export growth will increase thanks to increased manufacturing productivity. The Foundation points to increasing capital spending, improved global economic conditions, and business tax reform that are motivating businesses to invest in the manufacturing industry as factors that will boost manufacturing in the next few years.
The Bottom Line
The IT industry was key to the economic recovery following the financial crisis and has influenced many other industries with advanced technologies, such as artificial intelligence and machine learning. Health care has benefited from these new technologies and a higher demand for products and services due to the growing and aging population.