How is Financial Employment Doing Compared to Other Sectors?

The economy is booming.  Last week’s GDP figure – a measure of how large and strong an economy is – came in at $20.4 trillion.  This was the first time nominal GDP had come in above the $20 trillion mark.  On a year-over-year basis, GDP is growing at a 5.4% click.  Healthy, very healthy.

Source: BEA

Employment growth is also in good shape, with growth across virtually all sectors of the economy.  It is the sector look that is the focus here.  With employment booming, how is employment in the financial sector doing compared to the other sectors?  Here’s a look.

The Sector Look of Employment

Before giving away how financial employment is doing compared to other sectors of the economy, take a look at the following figure.  The figure has no labels.  There are 10 sectors shown, which are: (1) Trade, transportation, and utilities; (2) Retail trade; (3) Professional and business services; (4) Natural resources, mining; (5) Manufacturing; (6) Leisure and Hospitality; (7) Information, Computers; (8) Government; (9) Financial Activities; and (10) Education and Health Services.

Which of these 10 sectors would you guess shows up at the top (pink line) with the strongest growth rate so far in 2018?  Which sector would you guess is the bottom brown line, having shed jobs overall throughout 2018?  Which line is financial employment?  Could financial employment be the leader – the pink line?

Take your guess, because the next chart has the answers.

Source: BLS, Econometric Studios

The Sector Look with Labels

Perhaps disappointingly, financial employment comes in middle-0f-the-road (light green line), up a little less than 1% for 2018.  This performance is ok, but certainly not as strong as what the financial sector probably wants to be.

Interestingly, Natural Resources, Mining, and Construction shows up on top, up about 2.5% for 2018.  Perhaps surprisingly, on the bottom is Information, down slightly for 2018.

Source: Econometric Studios, BLS

A Final Look at Financial Employment

With a comparison view of financial employment compared to other sectors now established, let’s take a look at the business cycle of financial employment.  The following is a look at how financial employment has done by business cycle.  Each line represents the year in which employment peaked.  The y-axis is the percentage change in employment since the prior expansion’s peak.  The x-axis is the length of the economic expansion.

For example, the bottom line labeled 2008 is the last time we saw a peak economic expansion.  This means that the economic expansion ended in January 2008.  Since peaking, financial employment collapsed, dropping by more than 7% over the next three years since the January 2008 peak.  Since bottoming, financial employment has recovered.  Employment in the finance sector is now up almost 4% compared to January 2008.  That’s not a lot over the course of over ten years, but at least it is positive.  At 125 months, the current expansion is long in duration, but weak in strength.

Perhaps in the coming year financial employment will go through a boom expansion, something that has been missing for a while.

Source: BLS, Econometric Studios

Conclusion

Overall, financial employment is doing ok, with total growth in the industry through 2018 so far about middle-of-the-road compared to the other sectors of the economy.  The booming economy is certainly creating opportunities in the financial sector.