Every five years the Bureau of the Census takes the pulse of the business community and this data provides some insight into longer term trends – both positive and negative. The data takes a while to compile and interpret so it is always a little stale by the time it is released but the questions are designed to identify the bigger movements in business as opposed to the more ephemeral day to day issues. The latest release is based on information collected in 2012 and it contains some information that is more than obvious and expected along with some trends that are not quite as apparent.

The survey allows an observer to see where the growth in the economy is coming from and it also points out what parts of the system have faltered. The data from the 2012 report is based almost entirely on recession years and that will allow this report to become something of a benchmark in the future as it will be sandwiched between the boom years and the years of recovery (such as it is thus far). The focus of the census is on what is growing and expanding and what isn’t.

Analysis:  One of the first observations is perhaps the most apparent. The US energy sector has been booming and there is little reason to think that this expansion will slow down. Most of the predictions assert that shale oil and gas will remake the US economy in substantial ways into the future. The data thus far shows that the number of companies involved in the energy sector rose by 26% from 2007 through 2012. This includes legions of small and medium sized operations that were engaged in everything from actual extraction to servicing the sector. It does not include the support sectors but the evidence shows major expansion in these areas as well. This is the retail community, lodging, transportation and all the other activity that has to take place to support a booming community. Some parts of the oil and gas region have seen a quadrupling of their population in the last few years and there is no real end in sight to this growth. The employment in this sector has risen by 24% and there is no end in sight here either. Now that there has been some five to six years of experience to look back on there are some trends showing up. It appears that roughly 20% of those working in this region have no desire to work more than a few years before they go back home. They will make more in three or four years than they ever have and it may well be enough to allow them to sustain themselves back home where they left their families. This contributes to the job turnover in the sector. The revenue from the region has gone up by 34% and that is no shock either.

A second observation is not so sanguine.  Manufacturing went through a significant shift in this period – especially as concerns the rate of employment. Some 2.1 million jobs were lost in manufacturing while 173,000 were gained in the mining and extraction sector. It is obvious that the boom in the oil and gas sector is not absorbing the people who have been let go in the manufacturing community. The vast majority of the jobs lost have been due to the rise in automation and robotics. The good news has been that productivity has been improving but the bad news is that job growth has been anemic. It should be pointed out that this census data captures the worst of the downturn and little of the recovery thus far. The growth in manufacturing jobs has improved but there remains a mighty big hole from the recession. The average worker in the manufacturing sector is better paid than before as there are higher skills involved but there are simply fewer jobs available.

One of the sectors most clearly impacted was finance and insurance. This is where the recession really started and the fall was dramatic. In the years between 2007 and 2014 there was a 4% drop (some $137 billion). That came with a job loss of some 390,000. This is obviously a dramatic hit to the sector but the census data also pointed out that this collapse came after a very robust decade where these companies made a great deal of money. The revenue growth over the past 15 years was over 61% so it is obvious that there was a good run in there for a while. In just the last couple of years there have been some signs of recovery in this sector as there has been a rebound in housing that allowed some of the banks to regain some footing.

The fourth observation is also not much of a shock but it is not really clear whether this is a good thing for the economy long term. The health care sector is the largest in the economy and accounts for the largest percentage of employees – some 18.6 million. That is up 11% from the number five years ago and revenue is also up – 23% to over $2 trillion. The health care landscape changed considerably from when these numbers were collected and that will likely show up in the next census. The primary problem facing the health care system today is the cost of health care and by these numbers that is not an issue going away anytime soon. The ACA may have made some progress in terms of who is insured but there has  been nothing done to control the exponential costs of health care – especially as people get older and demand more care.

A fifth comment was related to the retail community. In an economy that depends on the consumer to provide some 80% of the GDP one way or the other, retail is more than a critical part of the equation. The recession took its toll with the loss of 778,000 jobs and 65,000 stores. Granted, there were still a million of them in 2012 and there have been some gains since but the fact is that retail is in transition. Internet sales are growing and that means less emphasis on the brick and mortar store as well as that staff. The growth in retail now is seen in transportation and warehouse work.

Source: Courtesy Dr. Chris Kuehl; Armada Corporate Intelligence