Finance industries led U.S. slowdown in 2007

Susan A. Baird

04/29/2008

FOUR SECTORS accounted for nearly 80% of the slowing in GDP growth last year, but only a quarter of the economy, the BEA said. /

WASHINGTON – “A downturn in the finance and insurance industry group accounted for nearly half of the slowdown in economic growth in 2007,” the U.S. Commerce Department’s Bureau of Economic Analysis said in a preliminary industry-by-industry report released today.

The real gross domestic product – the value of all goods and services produced nationwide, adjusted for inflation – grew 2.2 percent last year after growing 2.9 percent in 2006, the BEA noted. (READ MORE)
Thirteen of 20 private-industry sectors contributed to the economy’s deceleration, the bureau said. But changes in just four of those groups, which together accounted for about a quarter of the real GDP in 2007, accounted for nearly 80 percent of the slowdown.
Those sectors, and their changes in value added – a measure of an industry’s contribution to the GDP – were:
• The finance and insurance sector’s value added fell 0.3 percent in 2007 after rising 9.8 percent the year before.
• The construction industry’s value added fell 12.1 percent last year after falling 6.0 percent in 2006.
• The real estate, rental and leasing sector’s value added grew 2.1 percent in 2007, slowing from the previous year’s 3.4 percent.
• The mining sector’s value added grew less than 0.1 percent last year after growing 6.1 percent the year before.
Among other highlights, the bureau said, the private goods-producing sector shrank 1.5 percent last year, in its first downturn since 2001, while its current-dollar value share of the economy fell to 18.9 percent, the lowest on record.
The information and communications technology sector, however, saw its fourth consecutive year of double-digit growth, increasing 13.2 percent. The sector accounted for 3.9 percent of the economy last year but 22.3 percent of real economic growth.
Additional information, including the full Productivity and Costs report, is available from the U.S. Department of Labor’s Bureau of Labor Statistics at www.bea.gov.