Over-the-year percent change in employment, United States and 12 largest metropolitan areas, October 2008 (BLS, click on chart for clearer view).
Today’s GDP report shows that were it not for growth in the government sector, the economy would have shrunk by more than three times as much as it did–which was by 0.5% (annual rate) in the third quarter. For those who know and love national income and product accounting (NIPA) or just feel like waxing nostalgic about your college intro econ class, here’s how the -0.5% decline in real GDP breaks down in terms of percentage point contributions (from Table 2 in the report), a la the famous C+I+G+(X-M):
C (personal Consumption expenditures): -2.75
I (gross private domestic Investment): +0.06
G (Government consumption expenditures and gross investment): +1.14
(X-M) (net exports, or eXports minus iMports): +1.05
…which means that thus far in this recession, growth in government and net exports is offsetting most of the decline in consumption.
Which reminds me how fortunate I am to live and work in the DC metro area, an area pretty much centered around federal government-related work. Because “we don’t bend metal around here” (as a friend of mine puts it), we’re doing much better around here than in most other parts of the country. Today’s Washington Post story by Annys Shin complains of the unusually “widespread pain” of this recession, explained by the geographic breadth of the industries most adversely affected in this downturn–some of which admittedly may never “turn back up”…
Recessions can be notoriously uneven. They can wreak havoc with the livelihood of factory workers but not that of bank tellers or nurses. Whole industries can see jobs washed away forever, while others hum along and even grow.
This time, however, the pain is more widespread, economists say…
Another key difference with past recessions has been the downturn’s “serial nature”…
In other words, the recession has not affected industries and regions at once, but has rolled out in spurts.
Industries with some of the steepest job losses include construction, financial services, retail and manufacturing. The regional differences in job losses reflect how large a role those industries play in a given area’s economy.
In her story, Annys brings up California, Michigan, and Texas–but she doesn’t mention the DC area. Although the metro area economy isn’t exactly “booming” now, I know we’re still going to weather this recession a lot better than the rest of the country. Just a quick look at the Bureau of Labor Statistics’ “Economy at a Glance“ data shows why this area is so much better off than, say, Michigan: manufacturing jobs represent just 1.7% of total (nonfarm) employment here, but 13.7% of total employment in Michigan. Government jobs (572,000 of them, at all levels) represent 21% of total jobs in the DC metro area. And even though manufacturing jobs here have been declining recently, they’ve declined by a much smaller percentage than in Michigan or the rest of the country, because chances are pretty good that most of the metal we do bend around here, is bent for the government.
Here’s the latest (October 2008) metropolitan area comparison of employment trends from the BLS, from which the figure above comes, which shows Detroit dead worst, and only the oil-producing areas of the country doing better than the DC area–as of the fall at least, when those Texas communities were still benefitting from high oil prices… That’ll change, as the only part of our economy we can count on to grow over the next year is the federal government, or whatever the federal government will end up subsidizing.