Research desk responds: The financialization of the economy
By Dylan Matthews
What percentage of the US economy is taken up with financial services? My sense is that it has gone from single digits in the early 80s, to somewhere between 20% and 25% presently ... but I can't for the life of me remember where I got that from.
The Bureau of Economic Analysis keeps data on the value added to the economy by each sector of the economy. While it provides breakdowns, it initially groups the financial sector along with real estate, which makes sense given the importance of mortgage lending to the financial industry. Here's the growth both in the financial sector alone and in the financial sector along with real estate, since World War II:
While neither line shoots from single digits to 20-25, msantow is correct that 1980 marked a turning point. After the 1970s, in which the combined financial and real estate share hovered around 15 percent, the figure shot up until breaking 20 percent around 2000. It's also worth noting that this change is only in the combined line, while the financial sector measured alone continued growing at roughly the same pace. This is not exactly surprising, given how important mortgages and mortgage derivatives were to the rise of the financial industry in past decades, but it's still striking to see.
[I'd just add that financial-sector profits as a share of total corporate profits reached 45 percent shortly before the bust. -- Ezra]
Posted by: rmgregory | June 21, 2010 3:57 PM | Report abuse
Posted by: tomjf | June 21, 2010 7:58 PM | Report abuse
Posted by: Fanon | June 22, 2010 3:47 AM | Report abuse
Posted by: wphurley | June 22, 2010 5:54 AM | Report abuse
The comments to this entry are closed.