Charting the Decline of American Industry?

Graphs derived from a LinkedIn and Council of Economic Advisors (CEA) project paint a picture of American industry some may see as very troubling. When one views the industries that are expanding, versus those contracting, the sense is that we are seeing shrinkage in areas traditionally aligned with wealth creation in America, while expansion in industries one might characterize as spending, particularly on the part of government.

How has our economy evolved in the past five years? Which industries are shrinking or growing through these challenging economic times? These are some of the questions that the Council of Economic Advisors (CEA) delves into each February in the “Economic Report of the President” (ERP). This year, the CEA worked with us to glean further insights into industry trends both during the recent recession and after its end in June 2009 [1].

With the data and methodology [2] in hand, we calculated the growth rates in industry size between 2007 and 2011. Here’s what we found:

One wonders how much the huge growth in “renew-ables” is inefficient from a pure business perspective, as efforts in that sector are often subsidized by government spending. And it only seems to get worse from there.

The fastest-growing industries include renewables (+49.2%), internet (+24.6%), online publishing (+24.3%), and e-learning (+15.9%). Fastest-shrinking industries were newspapers (-28.4%), retail (-15.5%), building materials (-14.2%), and automotive (-12.8%).

While the chart at top of the previously linked page raises question, the one below itmay prove to be even more startling. The growth in health care can’t be all that comforting, part of it likely due to an aging Baby Boomer population. Meanwhile, pharmaceuticals, automotive, construction, real estate, retail and others have tanked, while public policy, the Internet, consulting and even think tanks are growing. The chart below certainly may give you something to think about.