THE SERVICE ECONOMY

Summary

“The Service Economy: Growth in a New Direction,” published in TIME on October 31, 1960, describes a shift in the U.S. economy from the production of tangible goods toward consumer and business services. The article argues that services—including medical care, education, travel, repairs, domestic help, and personal care—were becoming a larger share of consumer spending even as spending on goods weakened. It presents this change as a structural adjustment to rising incomes and a more consumer-oriented economy, rather than simply as a cause for alarm during an economic slowdown.

The article also examines the difficulty of measuring productivity and growth in services, since the value of a doctor’s, teacher’s, or other service worker’s output is less easily translated into conventional production statistics. It argues that service-sector spending can stabilize the economy during recessions because service employment and personal income are less volatile than factory employment. The adjacent material reports cautious forecasts for 1961, uneven automobile and retail sales, and a labor dispute involving James Carey and the International Union of Electrical Workers. The supplied clipping does not identify an author byline.

Key points

• The article identifies a transition from goods production toward a service-oriented U.S. economy.
• Consumer spending on services is presented as rising even while spending on goods declines.
• Services such as medicine and education are difficult to capture in conventional productivity and output measures.
• The growth of services is linked to higher incomes and consumers’ reduced need to spend most of their income on necessities.
• Service employment and spending are described as potentially stabilizing forces during recessions.
• The adjacent economic reporting describes a cautious outlook for 1961, mixed automobile and retail sales, and continuing labor-management conflict.