Money
The Geography of America’s Distressed Communities
Despite a recent slump in the markets, the U.S. economy is still putting up strong numbers. Unemployment is at its lowest point since the 1960s, and the U.S. manufacturing sector is thriving.
Looking beyond these big picture gains, many communities in the United States are struggling. Check cashing stores outnumber McDonald’s locations, the opioid epidemic rages on, and tens of millions are living in poverty around the country. It’s becoming more clear that the recovery from the financial crisis has been highly uneven.
The Data Behind Distress
To understand the disconnect between struggling counties and a high-flying national economy, researchers at the Economic Innovation Group (EIG) created the Distressed Communities Index:
To calculate the “health” of communities around the country, the Economic Innovation Group (EIG) looked at everything from vacancy rates to median income ratios. When visualized, a picture emerges of an America divided into superstar regions and broad expanses of struggling communities.
Distressed and prosperous ZIP codes […] represent two almost diametrically opposed experiences of living in the United States.
– Distressed Communities Index Report (2018)
Community Quintiles
When communities are divided into quintiles, stark patterns emerge. In the most distressed zip codes, over 40% of “prime-age” adults are unemployed, one-in-five adults did not graduate high school, and the housing vacancy rate is nearly double the U.S. average.
As well, deaths related to substance abuse and mental illness are 64% higher in distressed communities.
Struggling States and Cities
The DCI data reveals that those living in the lower half of the United States are more likely to call a distressed community home. In Alabama, Arkansas, Mississippi, and West Virginia, one-third or more of the population resides in the bottom quintile of zip codes.
On the flip side, in Colorado, Minnesota, Massachusetts, New Hampshire, and Utah well over 40% of the population live in prosperous zip codes.
Zooming in beyond the state-level, a geographical trend becomes clear: many of the struggling communities in the index are classified as rural. Between 2007 and 2016, nearly a third of all rural zip codes were considered “downwardly mobile”, compared to only 16% of those in urban areas.
Though rural zip codes tend to fare worse than their more urban counterparts, there are exceptions to that trend. One example is Bakersfield, California, where almost half of the city’s population lives in a distressed community.
GDP
Visualizing U.S. GDP by Industry in 2023
Services-producing industries account for the majority of U.S. GDP in 2023, followed by other private industries and the government.
Visualizing U.S. GDP by Industry
The U.S. economy is like a giant machine driven by many different industries, each one akin to an essential cog that moves the whole.
Understanding the breakdown of national gross domestic product (GDP) by industry shows where commercial activity is bustling and how diverse the economy truly is.
The above infographic uses data from the Bureau of Economic Analysis to visualize a breakdown of U.S. GDP by industry in 2023. To show this, we use value added by industry, which reflects the difference between gross output and the cost of intermediate inputs.
The Top 10 U.S. Industries by GDP
As of Q1 2023, the annualized GDP of the U.S. sits at $26.5 trillion.
Of this, 88% or $23.5 trillion comes from private industries. The remaining $3 trillion is government spending at the federal, state, and local levels.
Here’s a look at the largest private industries by economic contribution in the United States:
| Industry | Annualized Nominal GDP (as of Q1 2023) | % of U.S. GDP |
|---|---|---|
| Professional and business services | $3.5T | 13% |
| Real estate, rental, and leasing | $3.3T | 12% |
| Manufacturing | $2.9T | 11% |
| Educational services, health care, and social assistance | $2.3T | 9% |
| Finance and insurance | $2.0T | 8% |
| Wholesale trade | $1.7T | 6% |
| Retail trade | $1.5T | 6% |
| Information | $1.5T | 6% |
| Arts, entertainment, recreation, accommodation, and food services | $1.2T | 4% |
| Construction | $1.1T | 4% |
| Other private industries | $2.6T | 10% |
| Total | $23.5T | 88% |
Like most other developed nations, the U.S. economy is largely based on services.
Service-based industries, including professional and business services, real estate, finance, and health care, make up the bulk (70%) of U.S. GDP. In comparison, goods-producing industries like agriculture, manufacturing, mining, and construction play a smaller role.
Professional and business services is the largest industry with $3.5 trillion in value added. It comprises establishments providing legal, consulting, design, administration, and other services. This is followed by real estate at $3.3 trillion, which has consistently been an integral part of the economy.
Due to outsourcing and other factors, the manufacturing industry’s share of GDP has been declining for decades, but it still remains a significant part of the economy. Manufacturing of durable goods (metals, machines, computers) accounts for $1.6 trillion in value added, alongside nondurable goods (food, petroleum, chemicals) at $1.3 trillion.
The Government’s Contribution to GDP
Just like private industries, the government’s value added to GDP consists of compensation of employees, taxes collected (less subsidies), and gross operating surplus.
| Government | Annualized Nominal GDP (as of Q1 2023) | % of U.S. GDP |
|---|---|---|
| State and Local | $2.1T | 8% |
| Federal | $0.9T | 4% |
| Total | $3.1T | 12% |
Figures may not add up to the total due to rounding.
State and local government spending, largely focused on the education and public welfare sectors, accounts for the bulk of value added. The Federal contribution to GDP amounts to roughly $948 billion, with 52% of it attributed to national defense.
The Fastest Growing Industries (2022–2032P)
In the next 10 years, services-producing industries are projected to see the fastest growth in output.
The table below shows the five fastest-growing industries in the U.S. from 2022–2032 in terms of total output, based on data from the Bureau of Labor Statistics:
| Industry | Sector | Compound Annual Rate of Output Growth (2022–2032P) |
|---|---|---|
| Software publishers | Information | 5.2% |
| Computing infrastructure providers, data processing, and related services | Information | 3.9% |
| Wireless telecommunications carriers (except satellite) | Information | 3.6% |
| Home health care services | Health care and social assistance | 3.6% |
| Oil and gas extraction | Mining | 3.5% |
Three of the fastest-growing industries are in the information sector, underscoring the growing role of technology and digital infrastructure. Meanwhile, the projected growth of the oil and gas extraction industry highlights the enduring demand for traditional energy sources, despite the energy transition.
Overall, the development of these industries suggests that the U.S. will continue its shift toward a services-oriented economy. But today, it’s also worth noticing how services- and goods-producing industries are increasingly tied together. For example, it’s now common for tech companies to produce devices, and for manufacturers to use software in their operations.
Therefore, the oncoming tide of growth in service-based industries could potentially lift other interconnected sectors of the diverse U.S. economy.
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