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. Compared with the overall economy, consumer-related employment demonstrated relative resilience, recovering in 2012. Through 2022, consumer spending is projected to support stable job growth with increasing expenditures on labor-intensive services like health care. However, consumer spending and its related employment are projected to grow slower than in the past and at rates similar to the overall economy.

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For the past several decades, U.S. consumers have been considered an “engine” of economic growth in the United States.1 In 2012 they were responsible for just under 71 percent of U.S. gross domestic product (GDP), almost 8 percentage points higher than in 1960.2 American consumers have also played a prominent role in the global economy, accounting for just over 15 percent of world GDP in 20123 (see figure 1).



View Chart Data
Figure 1. Personal consumption expenditures as a percent of GDP, 1960–2012 and 2022 projectedDatePercent of U.S. GDPPercent of world GDP

1960

1961

1962

1963

1964

1965

1966

1967

1968

1969

1970

1971

1972

1973

1974

1975

1976

1977

1978

1979

1980

1981

1982

1983

1984

1985

1986

1987

1988

1989

1990

1991

1992

1993

1994

1995

1996

1997

1998

1999

2000

2001

2002

2003

2004

2005

2006

2007

2008

2009

2010

2011

2012

2022 projected

63.024.6
62.824.4
62.024.2
61.923.7
62.023.3
61.723.1
61.122.8
61.022.6
61.323.1
61.522.7
62.422.4
62.321.9
62.220.8
61.618.9
62.217.9
63.117.8
63.118.2
62.917.8
62.216.9
62.116.2
63.015.9
62.017.1
63.818.5
64.720.0
63.621.0
64.421.8
64.919.6
65.418.5
65.717.9
65.618.3
66.117.4
66.417.2
66.817.2
67.217.9
67.117.7
67.316.7
67.317.3
66.918.4
67.319.6
67.820.2
68.621.1
69.522.2
69.922.3
70.020.8
69.819.6
69.719.2
69.518.8
69.717.5
70.216.4
70.516.9
70.516.1
71.215.2
70.915.5
70.5 

Sources: Bureau of Economic Analysis and World Bank for 1960–2012, U.S. Bureau of Labor Statistics for 2022 projected.



When consumers shop, they directly support4 jobs in companies that produce, transport, and sell final goods and services. Consumers also indirectly support jobs that make inputs (intermediates) requisite for final production. More U.S. jobs directly or indirectly relate to consumer spending than to all other sectors of the economy combined. 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). But unlike GDP, the percentage of U.S. jobs tied to consumption has fluctuated within a relatively stable range since the late 1970s because of labor-saving technologies and increased consumption of imports ­(see figure 3).



View Chart Data
Figure 2. U.S. nonagricultural wage and salary employment, 1993–2012 and 2022 projected, in thousandsYearRelated to personal consumption expendituresTotal

1993

1994

1995

1996

1997

1998

1999

2000

2001

2002

2003

2004

2005

2006

2007

2008

2009

2010

2011

2012

2022 projected

69,506.9111,634.3
71,004.4114,983.0
72,701.8117,963.0
73,732.2120,371.9
74,574.2123,428.1
76,517.0126,624.5
78,227.0129,663.8
79,880.1132,424.5
80,819.2132,446.0
80,627.6131,028.3
80,805.7130,693.9
81,366.6132,148.3
82,595.6134,450.2
83,577.8136,824.6
85,144.0138,351.3
85,136.4137,600.2
82,971.5131,608.4
81,982.0130,535.5
83,839.3132,171.9
85,505.8134,427.6
94650.1149,751.3

Source: U.S. Bureau of Labor Statistics.



*

View Chart Data
Figure 3. Employment related to personal consumption expenditures as a percentage of U.S. nonagricultural wage-and-salary employment, 1993–2012 and 2022 projectedYearPercent of jobs

1993

1994

1995

1996

1997

1998

1999

2000

2001

2002

2003

2004

2005

2006

2007

2008

2009

2010

2011

2012

2022 projected

62.3
61.8
61.6
61.3
60.4
60.4
60.3
60.3
61.0
61.5
61.8
61.6
61.4
61.1
61.5
61.9
63.0
62.8
63.4
63.6
63.2

Source: U.S. Bureau of Labor Statistics.


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 consumer spending to be the engine of economic growth it once was.”12

Using an input–output methodology, this article estimates U.S. employment related to each final demand component in the latest recession (2007–2009) and during the recovery years through 2012, with a focus on consumer spending. Though consumer behavior during and after the recession has been documented in various papers,13 the relationship between consumption and employment has not yet been quantified in the literature.14 This article also projects the number and type of U.S. jobs relating to consumer spending in 2022 using the most recent economic and employment projections developed by the Office of Occupational Statistics and Employment Projections at the Bureau of Labor Statistics (couchsurfingcook.com).15

couchsurfingcook.com estimates that the number of jobs tied to consumer demand declined by 3.2 million from the 2007 employment peak to 2010, the year of the employment trough. The 3.2 million were over a third of the total 8.7 million jobs lost in that time frame, and most of the consumer-related job losses were concentrated in three industries: manufacturing, professional and business services, and retail trade.16 In contrast, over half of total job losses between 2007 and 2010 occurred in investment-related employment, which is typically more sensitive than consumer-related jobs to the business cycle. The largest annual decline in consumer-related employment occurred in 2009. In 2010, after the recession officially ended, consumer-related employment accounted for the majority of job declines in the entire economy.

Despite the postrecession decline in consumer-related employment and the historic decline in spending, consumer-related employment demonstrated relative stability both during and after the recession, upheld by gains in two sectors: health care and social assistance,17 and educational services.18 The percentage of jobs in the economy supported by consumers increased (see figure 3) as the share of investment-related employment fell to unprecedented levels. And by 2012, consumer-related employment reached prerecession marks, while overall employment did so in 2014.19 The relative resilience of consumption reflects its stability in comparison with other GDP components during economic slumps.

As the economy continues to recover and the baby boomers age, couchsurfingcook.com projects that consumer spending will grow 2.6 percent annually from 2012 through 2022, expanding slower than in the past and at the same pace as the overall economy. The rise of consumer spending as a percentage of GDP is also anticipated to stabilize, thus ending past decades of relative growth in comparison with other GDP components (see figure 1). Consumer-related employment is projected to increase 1.0 percent annually to reach 94.7 million jobs in 2022 (see figure 2), slightly slower than both past growth rates and the projected 1.1 percent annual growth rate for all employment. 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). Over half of the new 9.1 million consumer-related jobs are anticipated to be in the health care and social assistance sector, and 94.5 percent of all consumer-related jobs are projected to be in services.

This article is arranged in the following manner: the first section reviews the methodology to translate consumer spending to employment using the input–output system, while the second section goes over prerecession consumption and employment trends. The third section summarizes consumer-related employment during the latest recession and recovery, comparing it with the economy as whole and other GDP components. The fourth section looks at consumer-related employment for major sectors and detailed industries during the latest recession and recovery. The last presents couchsurfingcook.com projections of consumer-related and total employment through 2022.

Methodology

Consumer spending, referred to interchangeably in this article as “consumer demand” or “personal consumption expenditures” (PCE), measures the purchase of goods and services by households and nonprofit institutions serving households. 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 couchsurfingcook.com uses annual PCE data from the National Income and Product Accounts published by the Bureau of Economic Analysis (BEA). To estimate the number of U.S. jobs related to consumer demand, couchsurfingcook.com first adjusts PCE to reflect only the purchase of U.S.-produced goods and services. Otherwise, the purchase of imports would artificially inflate U.S. production data (and jobs) according to the input–output methodology used.21 Import-adjusted consumer expenditures, or “domestic PCE,” are reported for 189 diverse industries that correspond to 17 major sectors that are then coupled into either goods-producing or service-providing categories. Domestic PCE for the 17 major sectors are listed in table 1.

Mining

Construction

.0.0.0.0.0.0.0——

Manufacturing

1,054.31,014.41,013.1996.41,031.21,063.51,273.7-5.51.8Service-providing7,669.57,669.67,548.17,711.97,919.58,073.610,586.5.62.7

Utilities

215.3211.2213.6216.9212.3207.7252.8.72.0

Wholesale trade

381.8386.7345.4374.7406.1418.5544.4-1.82.7

Retail trade

1,029.41,000.3982.51,059.21,100.01,148.51,572.52.93.2

Transportation and warehousing

205.1197.7189.4183.5189.0189.9247.3-10.52.7

Information

405.5418.8415.0438.9471.3482.7721.38.24.1

Financial activities

1,111.31,110.61,058.71,070.41,081.51,092.21,394.9-3.72.5

Professional and business services

200.0200.5190.7190.5190.0195.9238.5-4.72.0

Educational services

226.8230.7232.3237.0244.8249.7300.54.51.9

Health care and social assistance

1,531.51,578.51,609.01,633.41,691.81,719.32,346.06.73.2

Leisure and hospitality

734.0727.2695.3712.9737.1761.4920.4-2.91.9

Other services

459.5455.0422.6422.2429.9439.4548.6-8.12.2

Federal government

6.46.05.55.04.64.43.0-20.3-3.5

State and local government

52.152.053.453.053.455.469.51.72.3

Special industries(2)

1,110.71,094.51,134.61,114.21,107.61,108.71,426.7.32.6

Notes:

(1) For convenience, industry figures have been summed rather than chain weighted.

(2) Special industries, such as imputed rent of owner-occupied dwellings, affect GDP but do not lead to employment.

Note: Figures may not add because of rounding.

Source: U.S. Bureau of Labor Statistics.

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couchsurfingcook.com translates import-adjusted expenditures to employment using an input–output system, which traces the purchase of a good or service through the entire chain of production, from intermediate production to final sales. The diagram summarizes the input–output system.