The United States is a world economic powerhouse with the largest nominal GDP in the world, valued at 18.46 trillion dollars which translate to 22% of the world’s nominal GDP. The economy of the United States is divided into three broad categories including the service sector, the manufacturing sector, and the agricultural sector.
1. Real Estate, Renting, and Leasing
Real Estate, renting, and leasing constitutes the largest sector of the United States’ economy with the GDP value added of $1.898 trillion accounting for 13% of the national GDP. The sector contributes to the economy in two fronts; the first being through consumer spending through rent and payment of household utilities, and the other being through residential investment which encompasses the construction of new housing units, broker fees, and residential remodeling.
Also known as the housing sector, the industry plays an integral role in the US economy and the industry’s impact was best displayed during the 2008 recession where a nationwide decline in home prices triggered America’s worst economic recession in the 21st century. The housing sector also plays a critical role in employment with over 1.9 million people working in the real estate, renting and leasing industry.
2. State and Local Government
The State and Local Government have a combined GDP value added of $1.336 trillion to become the second largest GDP contributor representing 9% of the total US GDP. Government spending is classified into two components government investment and government final consumption expenditure. Government investment is defined as the government spending used to finance projects with future or long-term benefits such as spending on research as well as spending on infrastructure. Government final consumption, on the other hand, is the government’s spending on items for direct consumption. State and local government spending are usually financed through taxation or domestic and international borrowing.
3. Finance and Insurance
The Finance and Insurance sector is another top GDP contributor in the United States with the industry having a GDP value added of $1.159 trillion which is equivalent to 8% of the total GDP. The Finance and Insurance industry is made up of four distinct sectors which include insurance carriers, credit intermediation and Federal Reserve banks, commodity contracts and securities, and trusts and funds and other financial vehicles. The growth of the finance and insurance industry is critical to the US economy as it helps in the facilitation of US exports. The industry is also estimated to directly employ over 5 million people in the United States which is equivalent to 4% of the nation’s total employment.
4. Health Care
The health sector has helped the United States to recover from the financial crisis of 2007 to 2008. The sector added 2.8 million jobs between 2006 and 2016, which was a rate almost seven times faster than the overall economy. There has been a 20-percent growth in health care sector jobs since 2008 while the average rate for the economy was only 3 percent. According to the Bureau of Labor Statistics, health care jobs are expected to grow at a rate of 18 percent from 2016 to 2026, again, much faster than the rate of the rest of the economy.
As a share of the nation’s Gross Domestic Product, health spending accounted for 17.9 percent in 2017. Additionally, investor interest in healthcare and biotech stocks continues. According to Real Money, the first half of 2018 saw a rebound in the IPO market that had not been seen for 20 years, and it was driven partly by investor appetite for healthcare and technology stocks. From July 2017 to July 2018, over 60 percent of IPOs were for healthcare and tech stocks, according to data from Renaissance Capital.
5. Wholesale Trade
Wholesale Trade involves the bulk distribution of commodities from producers to retailers or bulk consumers such as institutions and other wholesalers. Wholesalers are characterized by not spending on advertising targeted to the general public, and they do not have their own premises. Similarly, they are not designed for walk-in customers. The Wholesale industry in the United States has a GDP value added of $845 billion which is equivalent to 6% of the total GDP. The industry is also a significant employer with over 5.7 million people or 4% of total employment in the US being employed in wholesale trade.
6. Nondurable Manufacturing
The non-durable manufacturing industry produces commodities that are defined as having a lifespan of less than three years such as gasoline, electricity, and clothing. Non-durable manufacturing is a predominant pillar in the United States with a GDP value added of $821 billion or 6 percent of the national GDP, according to WorldAtlas. The non-durable manufacturing sector is less valuable than durable manufacturing; however, it employs more people and accounts for 4.4 million jobs compared to 349,000 jobs from durable manufacturing.
7. Construction
Construction in all areas is a growing industry. This includes residential and nonresidential builders; contractors that install or service mechanical systems like electricity, water, elevators, and heating and cooling; and civil engineering construction. According to the Bureau of Labor Statistics, construction and extraction occupations are projected to grow by 11 percent from 2016 to 2026, which is a rate faster than the average for all occupations, and are expected to add nearly 750,000 new jobs. The growth is stemming from overall economic and population growth, which is increasing demand for new buildings, roads, and other structures.
8. Technology
The tech sector is a huge component of the U.S. economy, according to Cyberstates 2018, an annual analysis of the nation’s industry published by CompTIA. Employment among computer and IT is projected to grow 13 percent from 2016 to 2026, faster than the average for all occupations. Demand for additional workers is stemming from cloud computing, the collection and storage of big data and information security.
The impact of the tech industry has affected nearly every state and, according to Cyberstates 2018, the industry is ranked in the top five of economic contributors in 22 states and in the top 10 of 42 states. Technology plays a role in almost all other sectors such as health care, advanced manufacturing, transportation, education and energy. The Internet of Things, artificial intelligence, machine learning, autonomous vehicles, and augmented and virtual reality are all changing society and industries.
9. Federal Government
The Federal Government comes in ninth position with a GDP value added of $658 billion which accounts for 5% of the total GDP. The Federal Government is a key employer in the economy and employs about 2.795 million Americans who are employed by the Federal Government. Healthcare, social security, and education take up the lion’s share of Federal Government investments accounting 25%, 24%, and 15% of the annual investments respectively.
10. Information
The Information industry encompasses companies and institutions which engage in the production, transmission, processing, storing, and selling of information which includes media companies, data processing companies, law firms, and telephone companies among others. The information industry is a key pillar of the US economy and has GDP value added of $646 billion which is equivalent to 4% of the total GDP. The sector is responsible for the employment of 2% of the total labor force in the United States totaling about 2.7 million jobs.