The rise of services in the US economy

The FRED Blog has discussed the very large share of employment and the very large share of consumer spending devoted to services. Today, we put this topic in a broader context by highlighting recent research from Ricardo Marto at the St. Louis Fed.

The FRED graph above shows BEA data indicating that, during the first quarter of 2024, the value of all services delivered by private businesses amounted to more than two-thirds of overall US economic activity.

Marto shows that the services sector also accounts for more than two-thirds of economic activity in most advanced economies and that similarly high proportions of total employment, hours worked, private firms in business, and household spending are connected to the delivery of services. He points to rising incomes and decreasing costs for producing goods as the reasons behind the growing share of the services sector in the overall economy.

For more about this and other research, visit the website of the Research Division of the Federal Reserve Bank of St Louis, which offers an array of economic analysis and expertise provided by our staff.

How this graph was created: Search FRED for "Value Added by Industry: Private Services-Producing Industries as a Percentage of GDP."

Suggested by Diego Mendez-Carbajo.