The services economy is the strength of the US economy.
The August employment report shows the evolution of the services labor force.
The ISM manufacturing report was subdued by idiosyncratic issues.
China is under significant financial pressure and will look to make a deal.
Sustainability is a popular word in today’s media and is a part of an abundance of freshly-coined terms which deal with climate change and how we can all be better stewards of the earth. And in the highly charged social environment we are in, some of the ways being proposed to achieve this environmental sustainability would be to end the use of fracking, fossil fuels, and the partaking of our favorite bovine. While the merits of these proposals are outside the scope of this discussion, one thing is for sure, and that is that a hurried implementation of them would be an end to our economic sustainability. Now, putting aside the frightening thought of a meat-less football season, we can look at the strength and sustainability of our economy that was evidenced in this past week’s data. With financial media doing its best to keep pushing the recession narrative, which so many have predicted for so long and that it’s still right upon us, the actual data shows the contrary. In reality, what we are seeing is the resiliency and sustainability of our modern services and consumption-based economy.
Unfortunately, the term services economy is usually thought of as being limited to the leisure and hospitality sectors when it actually includes technology, finance, education, healthcare, and others. The primary reason why we have enjoyed such a long expansion is that our economy has moved away from a manufacturing/exports base towards a services/consumption one. By doing so, the economy has become more sustainable and less susceptible to exogenous economic shocks which make for longer business cycles. The chart below shows the consistent growth and smoothness (sustainability) of services versus goods-producing employment throughout this transition.