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February 1997, Vol. 120, No. 2

Which industries are sensitive to business cycles?

Jay Berman and Janet Pfleeger

Industries react in different ways to the business cycle fluctations of the U.S. economy. Some industries are very vulnerable to economic swings, while others are relatively immune to them. For those industries that are characterized as cyclical, the degree and timing of these fluctuations vary widely—the industries that experience only modest gains during expansionary periods may also suffer only mildly during contractions, and those that recover fastest from recessions may also feel the impact of a downturn earlier and more strongly than other industries.

This article examines those industries in which demand and employment are most sensitive to business cycle movements over time. The Bureau of Labor Statistics develops projections of the labor force, gross domestic product (GDP) and its components, industry output, and industry and occupational employment every 2 years.¹ At the completion of the latest projections round (1994–2005), a new analysis of the projections was conducted that correlates GDP movements over time with changes in demand and employment. In future projections rounds, similar analyses will be conducted during the developmental stages of the projections and will be used:

• to identify industries that are projected to move differently with business cycles in the future than in the past. Upon identifying these industries, the projections staff will then determine the structural change or changes causing the break from the past or review its projections model and make appropriate modifications to ensure consistency between the historical and projected periods.
• to identify the industries and occupations that are most susceptible to business cycle swings for use in preparing career guidance information.²

This excerpt is from an article published in the February 1997 issue of the Monthly Labor Review. The full text of the article is available in Adobe Acrobat's Portable Document Format (PDF). See How to view a PDF file for more information.

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Footnotes
¹ See the projections articles relating to these topics in the November 1995 Monthly Labor Review.

² For example, see Career Guide to Industries, Bulletin 2453 (Bureau of Labor Statistics, 1994); and Occupational Outlook Handbook, 1996–97 edition,Bulletin 2470 (Bureau of Labor Statistics, February 1996).

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