The service economy demonstrates a sustainable pattern of spending, supported by its inherent diversity and the essential nature of many services. This growth trajectory can only be significantly disrupted by a strong exogenous shock that affects multiple industries and leads to a recession. As a result, the service economy has gone into recession only twice in the last 25 years: during the pandemic and the Global Financial Crisis (GFC). Therefore, services have a stabilizing effect on the overall GDP trajectory.
Due to technological innovation, globalization, outsourcing, and the shift in consumer demand, the service sector has become a larger part of the economy. Now, it consistently accounts for around 77-78% of GDP. As a result, the US economy as a whole has become more resilient.
Depending on how AI is integrated into the economy, this might be challenged in the future. This is due to the expected large-scale job displacement of service jobs, reshaping consumer behaviour and uneven distribution of accelerated productivity.
