Board of Governors of the Federal Reserve System

Figure 1. Measures showing declining importance of goods production

This is a two-panel line chart showing data from 1950 to mid-2026. The left panel displays monthly data with the y-axis measuring percent of private employment, ranging from 5 to 40 percent. It shows one variable: manufacturing employment share, represented by a black line. The series shows a steady decline from approximately 35 percent in the 1950s to about 10 percent in the most recent data, with periodic fluctuations during NBER-defined recession periods marked by gray shading.

The right panel displays quarterly data with the y-axis showing a log index (2005=0), ranging from -2 to 0.5. Two variables are plotted: Industrial production (black line) and GDP (green line). Industrial production starts at approximately -2 in 1950 and increases to about 0 in the mid-2000s, after which it flattens out, fluctuating some but displaying essentially no net growth through the most recent data. GDP starts at approximately -2 in 1950 and rises at a similar pace to industrial production, on net, until the mid-2000s, after which GDP continues rising to reach roughly 0.5 in the most recent data. Both series display periodic fluctuations especially during NBER-defined recessions marked by gray shading.

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Figure 2. Good production drives the business cycle

This is a two-panel bar chart showing contributions to 4-quarter GDP growth from 1950 to mid-2026. Both panels display quarterly data with y-axes measuring percentage points, ranging from -8 to 8. The left panel shows two variables: Goods (black line) and Services (red line). The right panel shows two variables: Goods & structures (black line) and Services (red line). The Services line is identical in the two panels.

Throughout the period, both panels show significant fluctuations in contributions, with notable negative contributions during recession periods marked by gray shading. In both panels, Services contributions generally show positive values, going negative on only two occasions: the mid-1950s and 2020. Services contributions a generally more stable than goods contributions. Goods contributions (left panel) exhibit greater volatility, with sharp negative swings during all recessions, and this volatility is even more apparent for Goods & structures (right panel).

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Figure 3. Industrial production trends vary by industry and by market group

This is a two-panel line chart showing 3-month moving averages of industrial production indices from 1990 to mid-2026. Each panel uses a log index where January 2005 equals 0. The left panel, which has a y axis ranging from -0.8 to 0.4, displays four variables: Durable mfg (manufacturing), Nondurable mfg, Mining, and Utilities, representing major industry aggregates. Durable manufacturing shows significant growth from about -0.8 in 1990 to peak around 0.2 in the mid-2000s, followed by a sharp decline during the 2008-2009 recession and subsequent recovery to roughly its pre-recession level, with no net growth since then. Nondurable manufacturing grows slowly from about -0.2 to 0 in the mid-2000s, drops sharply during the 2008-2009 recession, then trends down slightly through the most recent data. Mining shows volatility, declining trending down gradually before the mid-2000s then rising significantly on net, but with significant volatility, after that. Utilities grows from around -0.2 in 1990 to 0 in 2005, then grows at a somewhat slower pace thereafter.

The right panel shows four variables: Consumer goods, Total equipment, Nonindustrial supplies, and Materials, representing major market groups. Each of the market groups shows considerable growth prior to the mid-2000s; total equipment continues growing until the 2008-2009 recession, while the other categories stay about flat at their mid-2000s level until the recession. Each category drops sharply in the recession; total equipment rebounds quickly then trend down slightly, on net, through the latest data. Materials recovers and shows considerably net growth since then. Nonindustrial supplies and consumer goods show minimal recovery from the recession and, in the most recent data, remain below their mid-2000s levels.

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Figure 4. Goods-industry value added has grown faster than gross output

This is a two-panel line chart showing annual data from the mid-1970s to the mid-2020s. Both panels use a log index (2005=0) with y-axes ranging from -1 to 0.4.

The left panel displays three variables for manufacturing: IP (Industrial Production), NIPA gross output, and NIPA value added. In the left panel, all three manufacturing series show general upward trends from 1980 to the mid-2000s, followed by declines during the 2008-2009 recession. IP and NIPA gross output recover only partially from the recession and remain near their mid-2000s level in the most recent data. NIPA value added recovers from the recession then continues growing, exceeding 0.2 in the most recent data.

The right panel shows two variables for goods industries: NIPA gross output and NIPA value added. Value added grows slightly faster than gross output prior to the mid-2000s. Both series decline in the 2008-2009 recession, but gross output recovers only gradually then flattens out, on net, just above 0 through the latest data. Value added recovers from the recession then continues growing, reaching nearly 0.4 in the most recent data.

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Figure 5. Gross-output deflators have risen faster than value-added deflators

This is a two-panel line chart showing annual data from the mid-1970s to the mid-2020s using implied deflators. Both panels use a log index (2005=0) with y-axes ranging from -1 to 0.5. The left panel displays gross output and value added deflators for manufacturing. The right panel shows gross output and value added for goods industries.

In the left panel, the manufacturing gross output deflator rises faster than the value added deflator prior to the mid-2000s. Both deflators fall somewhat from the late-1990s to the earl 2000s. The gross output deflator rises sharply from the early 2000s to the early 2010s, while the value added deflator rises more gently during that period. Both deflators jump after 2020. The right panel shows essentially the same pattern but for goods industries: increases for both variables until the late 1990s, slightly downtrends until the early 2000s, then a sharp increase for the gross output deflator and a more gentle uptrend for the value added deflator, with both series jumping after 2020.

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Figure 6. Goods GDP has grown faster than goods-industry value added

This is a two-panel line chart. The left panel shows annual data from the mid-1970s to the mid-2020s using a log index (2005=0), with the y-axis ranging from -.8 to .8. Three variables are displayed: Goods ind. gross output (goods industry gross output), Goods ind. value added (goods industry value added), and Goods GDP. All three series show general upward trends from 1980 through the mid-2000s, followed by declines during the 2008-2009 recession. After that recession, goods GDP resumes an uptrend similar to its pre-recession pace and reaches about 0.6 in the most recent data; value added follows a less steep uptrend than its pre-recession pace and reaches almost 0.4 in the most recent data, and gross output flattens out, on net, through the most recent data, ending the time period close to 0.

The right panel shows monthly data from 1950 to the mid-2020s, with the y-axis measuring percent of nominal GDP ranging from 10 to 50 percent. Two variables are plotted: Goods ind. value added and Goods GDP. Goods GDP starts the period at almost 50 percent of nominal GDP, while goods industry value added starts around 35 percent. Both series show pronounced downward trends from 1950 through the mid-2000s, after which goods GDP flattens out, on net, at close to 25 percent, while goods industry value added continues trending down to reach just above 10 percent in the most recent data.

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