Industrial Production as a share of real GDP

I regularly see people comment about the decline in the importance of industrial production but I never see any data on how much it has declined.  Finally, I saw a libertarian blogger talk about as a point in his argument but he also revealed that he   had not idea what had happened to industrial production relative to the economy.

The Federal Reserve actually publishes the value of industrial production as part of its monthly industrial production report, so it is quite easy to get the  raw data to construct a series of industrial production as a share of GDP.  It has fallen from 33% of real GDP in 1972 — as far back as the data goes — to 23% currently.  The trend is for the share to fall 2.4% annually.

Manufacturing employment has had a similar fall, from 31% to 13.7% last quarter. The employment has seen a 2.4% annual decline.


For a while I agreed that there was an error in using this data to calculate industrial production as a share of GDP.   But after more consideration and checking with the Fed I have concluded that the original chart is correct.  There is no conceptional difference between the Fed data and the real GDP accounts.



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