By Alí R. Bustamante

About the author: Ali R. Bustamante is a professor of practice at the University of New Orleans Department of Economics and Finance.

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.

Employment data should force investors to rethink what is actually sustaining the economy. Healthcare and social assistance employ more than 20 million Americans. The Bureau of Labor Statistics projects it to account for about 38% of all new U.S. jobs over the next decade, far outpacing tech, manufacturing, and construction combined.

The data tell a clear story of steady growth. In 2000, healthcare accounted for just over 8.2% of all nonfarm jobs. By 2025, it had climbed to 11.4%. Crucially, this rise has rarely reversed. No other major sector is close to its level of stability.

Professional and business services, manufacturing, construction, information, retail, accommodation and food services all contracted during downturns. Healthcare didn't just avoid decline. It expanded, month after month, at the exact moment the rest of the economy was breaking. Some of this reflects disproportionate job losses in lower-wage sectors during economic downturns, but it also reflects the essential nature of healthcare. Demand for medical care doesn't disappear in a recession; it intensifies. Economic stress worsens short and long-term health outcomes. It drives up chronic illness, emergency care, and behavioral health needs, forcing hospitals and clinics to staff up precisely when other employers are cutting back.

And healthcare jobs are strong multipliers at the local level. Hospitals and ambulatory care providers support employment in transportation companies, food vendors, educational programs, janitorial services, construction firms, and biomedical suppliers. When a hospital expands, the surrounding economy expands with it. When a hospital closes, the economy immediately contracts. No AI firm has that kind of footprint in Baton Rouge, Des Moines, or Fresno.

This brings us to the real danger on the horizon. The U.S. economy is leaning on a sector whose future stability isn't guaranteed. It is policy-dependent. Unlike AI, whose trajectory is tied to capital markets, investor sentiment, and technological progress, healthcare's stability depends directly on federal and state policy.

Three major healthcare supports are at risk. The enhanced Affordable Care Act subsidies, expanded under the American Rescue Plan, are scheduled to expire at the end of the year. If they lapse, premiums for millions could jump by hundreds of dollars a month. Millions could lose coverage entirely. Rising uninsured rates increase uncompensated-care burdens for hospitals, strain budgets, slow hiring, and weaken regional growth.

In addition, Medicaid and Children's Health Insurance Program enrollment has already fallen sharply as states unwind Covid-19-era continuous-coverage rules. From March 2023 to July 2025, more than 17 million people lost coverage. Hospitals can't absorb that level of uncompensated care without cutting services or closing outright. More than 700 rural hospitals are currently at risk of closing. And when a hospital closes, a regional economy loses one of its few recession-proof anchors.

Finally, the healthcare workforce, already strained by shortages of nurses, medical assistants, mental health counselors, and clinical lab workers, faces an uncertain federal funding landscape. President Donald Trump's proposed fiscal year 2026 budget includes over $400 million in cuts to workforce programs that expand the supply of nurses, physicians, behavioral health specialists, and other healthcare workers. Without stable investments in training and education, health systems can't staff new units, expand services, or meet rising demand. A recession-proof sector becomes recession sensitive.

If policymakers allow Medicaid funding to erode, ACA subsidies to expire, and the health workforce pipeline to thin, they will weaken the very sector that has kept the economy stable through every crisis of the 21st century. No amount of AI-driven equity exuberance will be enough to keep the real economy from feeling the shock.

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December 05, 2025 13:06 ET (18:06 GMT)

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