The rise and fall of industries and citiesThis graphic came from a recent Wall Street Journal article on how much the financial industry currently dominates the S&P500 (I apologize for the small size - it's the biggest Blogger would let me do). The chart gives the percentage of total stock-market value for each industry in the S&P500 in 1979, 1989, 1999, and today. What's interesting is when you look at how some of these industries have shifted in importance over time and how that affected certain cities:
- Note that the financial industry has rocketed from 6% to 10% to 14% to 21% of the market. That is a heck of a lot of money floating around, and it is directly responsible for New York's renaissance since the 1970s.
- You can see the SF/Silicon Valley and Austin crash from 1999 to today as the tech industry fell from 30% to 15%, and Dallas' Telecom Corridor crash as telecom drops from 9% to 3%.
- The 80s really were the "materialist decade" (as 'Material Girl' Madonna pointed out to all of us), with consumer discretionary and staples on top.
- The rise of health care along with our own rapid rise of the Texas Medical Center.
- The energy crash and its impact on Houston in the 1980s as it went from 21% to 12%.
- The energy resurgence and our renaissance since 1999 as it went from 5% to 9%.
No industry seems to be able to stay on top for more than a decade (all bubbles eventually pop), which doesn't bode well for the financial industry. Based on Warren Buffett's recent comments about the outrageous fees of financial middlemen these days, financials and NYC may be in for a tumble sometime soon - probably to be displaced by health care as the next leader as baby boomers age. On the other hand, energy doesn't seem to have gotten overwhelmingly large, so Houston may be in good shape for a while.