Archive for the 'GDP by Industry' Category

Industry in Focus: How Health Care and Social Assistance Fared in Third Quarter

Health care is an industry that many of us experience firsthand, whether receiving treatment for an illness or injury or simply getting an annual check-up. In the third quarter of 2015, health care and social assistance was the second-leading contributor to the 2 percent increase in the U.S. economy’s growth, providing 0.38 percentage point to real GDP.

Of particular interest: health care and social assistance accelerated from July through September, after decelerating for three consecutive quarters. (We describe an industry as accelerating when its growth in the current quarter is faster than its growth in the previous quarter. Conversely, we describe an industry as decelerating when its growth in the current quarter is slower than its growth in the previous quarter.)

We learn even more about what is happening inside the health care sector when we dig down into the underlying detail tables that we introduced last quarter.

Health care and social assistance consists of four underlying industries—ambulatory health care services, hospitals, nursing and residential care facilities, and social assistance. A glance at the contributions of the underlying industries reveals that three of the four industries had actually been declining for two quarters.

However, growth in ambulatory health care services (which includes outpatient-services providers such as physicians, dentists, or optometrists) had hidden those declines. In the third quarter those three industries stopped declining and started growing again, which explains why health care and social assistance as a whole both grew and accelerated during the period.

Combining all of these observations from just a handful of tables allows one to paint a rich picture of what’s actually going on in the economy. What started as a relatively straightforward story—“health care grew in the third quarter”—becomes far more interesting when we begin to look at how that growth changed from previous quarters and how different parts of the industry fared.

Retail Trade Led Growth in the Third Quarter Gross Domestic Product by Industry

Retail trade; health care and social assistance; and agriculture, forestry, fishing, and hunting were the leading contributors to the increase in U.S. economic growth in the third quarter of 2015. Overall, 15 of 22 industry groups contributed to the 2.0 percent increase in real GDP in the third quarter.

Real GDP Jan 21

  • Retail trade increased 7.1 percent in the third quarter, after increasing 3.7 percent in the second quarter.
  • Health care and social assistance increased 5.5 percent, after increasing 2.1 percent.
  • Agriculture, forestry, fishing, and hunting increased 37.5 percent, after decreasing 3.9 percent.Real Value Jan 21

For more information, read the full report.


Industry in Focus: Finance and Insurance and More

This quarter, Industry in Focus is actually Industries in Focus. Beginning with this quarterly GDP by Industry release, we’re delighted to introduce a new set of products—the Quarterly Underlying Detail Tables.  Previously, quarterly GDP by industry statistics were only available for 22 industries.  The new underlying detail tables provide the same data for 71 industries, allowing for even more in-depth analysis of economic trends.

The industries we’ll discuss this quarter highlight some of the advantages of these new data. In the second quarter of 2015, the finance and insurance industry was the largest contributor to GDP growth, contributing 0.84 percentage point to the overall 3.9 percent increase in real GDP.  Finance and insurance is an aggregate of four detailed industries—Federal Reserve banks and credit intermediation; securities, commodity contracts, and investments; insurance carriers; and funds, trusts, and other financial vehicles.  With the new underlying detail tables, we can now see that these industries exhibited differing behavior, with three of the four finance and insurance industries showing strong growth.  Federal Reserve banks and credit intermediation grew 18.2 percent, contributing 0.48 percentage point to the growth in real GDP; insurance carriers grew 13.2 percent, contributing 0.33 percentage point; and funds, trusts, and other financial vehicles grew 69.0 percent, contributing 0.13 percentage point.  At the more detailed 71-industry level, these three industries were the second, fourth, and thirteenth largest contributors to growth.   This helps to explain why the aggregate finance and insurance industry was the largest contributor to growth at the 22-industry level.

However, you may have noticed that securities, commodity contracts, and investments actually contracted in the second quarter, decreasing 6.6 percent and subtracting 0.10 percentage point from real GDP growth. Without the underlying detail data, this piece of information would go unnoticed.  Growth in finance and insurance was strong because of the three other industries, but underlying detail lets us see that not all of the finance and insurance industries had a strong quarter.

A logical question to ask is, “Why would one industry contract in the second quarter when three related industries grew?” The answer is that each of the four industries has a different focus, even though all four relate to finance or insurance.  The securities and commodity contracts industry includes establishments that underwrite and make markets for securities and commodities, act as agents between buyers and sellers of securities and commodities, and manage portfolios of assets.  If you own shares of a company’s stock or follow the Dow Jones Industrial Average, you’re well acquainted with the activities of this industry.

Federal Reserve banks and credit intermediation, on the other hand, encompass two activities that don’t work directly with securities. Federal Reserve banks and similar monetary authorities manage the country’s money supply, while credit intermediation involves much of what you typically think of as consumer and commercial banking—taking in deposits and lending funds.  While the Federal Reserve banks and credit intermediation industry and the securities and commodity contracts industry both relate to finance, and while the two industries can have an impact on each other, they don’t necessarily exhibit the same growth.

In the second quarter of 2015, for example, the decline in the securities and commodity contracts industry may be traced to concerns in the stock market, perhaps reflecting worries about the Greek debt crisis and uncertainty about whether or not the Federal Reserve would raise interest rates. This may have led investors to pull money out of the stock market, as both the S&P 500 and Dow Jones Industrial Average fell during the quarter.

Where did that money go? Some of it may have gone to regular savings banks, as evidenced by the growth in credit intermediation.  The FDIC reported that in the second quarter, net income for FDIC-insured institutions (which includes your neighborhood bank) was the highest on record.  This was reflected in the industry’s strong growth.  Concerns about the stock market can lead investors to pull their money out of the market and place it in the more stable accounts offered by savings institutions.  Conversely, a strong stock market can lead investors to put more of their money into securities.

You can see this in our historical data. In nine of the past fourteen quarters, Federal Reserve banks and credit intermediation moved in the opposite direction of securities and commodity contracts.  So while the two industries broadly deal with finance, their differing roles within finance mean they often differ in growth.  This example illustrates some of the many benefits of the quarterly underlying detail tables.  The new detail enhances economic analysis much in the same way that quarterly GDP-by-industry data provides more tools to analyze national GDP.  The standard quarterly GDP-by-industry data allow users to see differing patterns among industries; similarly, the quarterly underlying detail tables enhance the ability of users to see differing patterns within industries.

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