Seeing the US economy through a more precise lens
Americans are getting their first official peek at what the US economy really looks like.
Result: lots of services, a huge information economy, and no more crazy-quilt classifications that lumped telemarketing with bronzing baby shoes.
By completely overhauling its 1930s-era classification system, the US Census Bureau is poised to give consumers and businesses alike a much better picture of how the economy actually operates. On March 16, the bureau released the first report of the 1997 economic census, which incorporates the new classifications.
Among the major findings:
*The information sector of the US economy not only exists, it's gargantuan. It employs 3.2 million people, grosses some $641 billion a year, and includes everything from publishing to motion pictures.
*America's health-care system dwarfs even that, however, with 13.6 million jobs and $890 billion in sales.
*The economy is crawling with consultants. Some 5.4 million people work in the newly designated professional/scientific/ technical services sector. Last year, their companies sold $608 billion in services.
The new system, called the North American Industry Classification System (NAICS), marks a significant improvement. It replaces the manufacturing-dominated Standard Industry Classification (SIC) codes with a more comprehensive and service-based view of the United States.
"It's the right step," says Rajeev Dhawan, director of econometric forecasting for the UCLA Anderson Forecast, published quarterly. "It will be good to see what the new face of the economy will look like."
The biggest drawback, he adds, is that researchers will find it more difficult to make historical comparisons, because the new classifications replace or revise 60 percent of the SIC system.
But it was clear something had to be done with the government's economic statistics. Even with continual revisions, the bureau couldn't pigeonhole fast enough the new industries the economy was creating.
Under the old system, one of the fastest-growing segments of the economy was "business services not elsewhere classified," which included things like telemarketing and package-delivery. The new system reclassifies those companies into 36 different industries.
"For the first time, we're gong to measure those new sectors," says Carole Ambler, chief of the service-sector statistics division at the Census Bureau. Among the new industries: warehouse clubs and superstores, paging, bed-and-breakfast inns, telemarketers, and automotive oil change and lube shops.
Manufacturing will change, too. The economic census breaks out for the first time computer and electronic manufacturing, grossing $431 billion and employing 1.7 million people. The new category jumps to the No. 2 spot of the largest manufacturing categories - behind transportation equipment but ahead of old-line leaders such as food ($425 billion), chemicals ($418 billion), and machinery ($272 billion).
The NAICS system is still evolving, so the next economic census in 2002 will further refine the categories.
For example, "not all our questions about the Internet will be answered by this census," says Robert Marske, a special assistant at the Census Bureau. For the moment, Internet divisions of companies will be counted with the companies themselves. And Internet commerce companies are counted with catalog companies (with $109 billion in sales).