Scan the [latest market commentary] and you will hear a familiar refrain: Artificial intelligence is propping up the U.S. economy. Analysts see soaring share prices for Nvidia, Meta Platforms, and Microsoft, along with a wave of data center construction, and conclude that America’s economic resilience rests on AI’s shoulders.Confusing the stock market with the real economy is the oldest analytical mistake in finance. AI is propping up the stock market. But healthcare is propping up the economy.
The difference is unmistakable when you look at how these two industries behave in the labor market. Healthcare is the only major sector whose share of total U.S. employment rose in every recession and under nearly every macroeconomic condition of the past 25 years. It has never posted a sustained decline—not during the 2001 economic downturn, not during the 2008-09 global financial crisis, and not during the Covid-19 pandemic-related recession of 2020.
Meanwhile, the much-celebrated AI boom is barely visible in labor-market data. Information sector employment—the broadest proxy for tech—shrank from 2.7% to 1.8% as a share of total jobs during the past 25 years. At the same time, tech firms’ equity valuations have skyrocketed.
https://www.barrons.com/articles/healthcare-employment-important-for-economy-aca-subsidies-5d307f93
I guess it goes without saying that “healthcare” is in sort of a bubble (not a stock market bubble) at the moment. The loss of ACA subsidies will put millions of people at risk of dropping their insurance, which has vast implications for health care employment - from hospitals and doctors’ offices to physical therapy locations, nursing homes, and even as far down the food chain as drug stores. Other “paycheck” related areas include mundanities like janitorial services, food vendors, ambulance services, and, relatedly, the rural hospitals that rely on outright subsidies and indirect subsidies like ACA patients for their existence.
The AI boom has been prodigious, but other than construction crews and fights over power and water, it doesn’t produce much ongoing employment. (Very big for chipmakers, obviously. Hooray Taiwan!) Healthcare does, and it’s widely dispersed into every city, village, and hamlet in the country.
I’m not sure what to make of all this, but it’s an interesting take on what might, or might not be coming down the road depending on Congress & legislation. Or not.