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The accelerating digitization of the US economy

The tide of digitization is impacting virtually every sector of the US economy, and its pace will accelerate over the next 10 years. The implications for companies, governments, and individuals are enormous, particularly in those areas where digitization is unevenly distributed.

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The accelerating digitization of the US economy

  1. 1. @McKinsey_MGI Implications Companies Opt out at your peril Know where the digital frontier is–and realize that it's not waiting for you Just having IT is not enough–you need the "must-have" digital capabilities Beware competitors from everywhere Governments Embrace and enable digital Ease the transition Don’t kill the goose, but solve for the issues together with technologists Adapt and learn Individuals It's a great time to be a consumer and a user Embrace the evolution of your “job” Build digital savvy Automation could also accelerate displacement of middle-skill jobs 45% Millions of middle-skill jobs displaced 1960s 1970s 1980s 1990s 2000s 2007-15 2015-25 US MIDDLE-SKILL JOBS DISPLACED DUE TO TECHNOLOGICAL CHANGE 2 3 5 5 6 6 12 5% 7% 4% 6% 9% 8% 10% 13% 15% Low Estimate Medium Estimate High Estimate of tasks could be automated Up to 30%of tasks in 60% of jobs could be automated Up to 1997 2005 2013 1x baseline 1.7x increase in leading sectors 4.1x increase in leading sectors 8% 12% 14% Most digitized sectors Rest of US economy Overall ...and the digital leaders are maintaining an enormous lead over everyone else Selected sectors Overall Assets Usage Labor Some industries, however, are more digitized than others... ICT sector Finance and insurance Wholesale trade Oil and gas Advanced manufacturing Government Personal & local services Retail trade Education Transportation/warehousing Basic goods manufacturing Health care Construction Hospitality Relatively low digitization Relatively high digitization Denotes leading digitized firms within relatively un-digitized sectors By 2025, digitization could contribute at least $2 trillion to annual US GDP* *This sizing is not comprehensive and reflects only certain applications of big data, the Internet of Things, and online talent platforms. The potential for technology-fueled growth is much wider. ~0.5 ~0.8 1.6 ~1.3 0.3 0.4 Total Multifactor productivity Capital productivity Labor productivity $2.2 Trillion Low estimate High estimate 98% Digitization now touches up to 98% of the economy Those on the digital frontier have 2-3X faster profit margin growth. 10% ICT* as a share of GDP, taking into account price effects 5%ICT* as a share of GDP in official statistics It’s much broader than purchasing IT equipment and systems *Information and communications technology The Accelerating Digitization of the US Economy MCKINSEY GLOBAL INSTITUTE