Consumer spending: an engine for U.S. job growth (EXCERPT), Monthly Labor Review Online, November 2002

Consumer spending: an engine for U.S. job growth

Mitra Toossi

Consumer decisions about what to buy, how much to buy, and when to buy from the myriad of goods and services that are available today not only satisfy their own needs, but also determine how much of which goods and services ultimately will be produced. The production of these goods and services creates jobs in all sectors of the economy. Some of the jobs that are created are the direct result of production in industries that produce goods and services to meet consumer demands (final goods), and the rest are generated in industries that provide inputs for the production of final goods and services (intermediate goods). Whether employment is generated in the final-goods industries or in related intermediate industries, it originates from consumer choices and reflects the wishes of those consumers. Each component of gross domestic product (GDP), which consists of personal consumption expenditures, investments, exports, and government expenditures, contributes in varying degrees to the level and distribution of output and employment. Personal consumption expenditures, accounting for the largest share of GDP, are the main generator of employment in the economy.¹

In 2000, employment generated by consumer spending was 83.2 million, accounting for 62 percent of total employment in the economy. Consumer spending is projected to add 11.3 million net new jobs by 2010, so that total employment resulting from consumer spending will reach 94.5 million, or 61 percent of all employment that year. The annual growth rate of employment generated by consumer spending is projected to be 1.3 percent, considerably less than the 1.8-percent growth rate during 1990–2000.

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Footnotes

1 Personal consumption expenditures are defined as the market value of spending by individuals and not-for-profit institutions on all goods and services. Personal consumption expenditures also include the value of certain imputed goods and services—such as the rental value of owner-occupied homes—and compensation paid in kind— such as employer-paid health and life insurance premiums. After-tax wages, salaries, interest income, dividends, and property income, in addition to transfer payments such as Social Security, unemployment insurance, and welfare payments, are the main sources of income at consumers’ disposal for spending.

Related BLS programs

Consumer Expenditure Survey
Consumer Employment Projections

Industry output and employment projections to 2010—Nov. 2001.
Occupational employment projections to 2010—Nov. 2001.

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