Surprisingly, according to this WSJ article, the finance sector's share of the economy is at a new high at 8.4% of GDP!
Combined, finance and insurance firms accounted for 8.4% of U.S. gross domestic product last year, according to the Commerce Department, eclipsing the peak it hit in 2006. In 1950, the financial sector accounted for just 2.8% of GDP.
Having worked in the industry, I can say that it doesn't add much value, and net of the rents it extracts in terms of fees, it actually provides negative value in aggregate. This is even worse on a risk-adjusted basis, since a large financial sector also implies greater leverage in the economy, as we saw all too well in 2008-09.
I, for one, would not be sad to see the sector's share shrink back to 5% or so, which was the level in the early 80s before we let the FIRE economy get out of control.
Combined, finance and insurance firms accounted for 8.4% of U.S. gross domestic product last year, according to the Commerce Department, eclipsing the peak it hit in 2006. In 1950, the financial sector accounted for just 2.8% of GDP.
Having worked in the industry, I can say that it doesn't add much value, and net of the rents it extracts in terms of fees, it actually provides negative value in aggregate. This is even worse on a risk-adjusted basis, since a large financial sector also implies greater leverage in the economy, as we saw all too well in 2008-09.
I, for one, would not be sad to see the sector's share shrink back to 5% or so, which was the level in the early 80s before we let the FIRE economy get out of control.
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