When we think about what’s driving the US economy, we tend to think about AI, technology and all things digital. But in fact the biggest driver of US growth is healthcare. Investors should take note of what this says about America’s future.
In last month’s job report, healthcare accounted for a whopping 43 per cent of all new jobs added. The sector was a steady driver of growth over the previous year as well, and the Bureau of Labor Statistics says that it will continue to be so in the future. In fact, its 2024 to 2034 projections show that healthcare and the social assistance sector (which includes things that overlap with healthcare, such as vocational assistance and food support, as well as other things like housing aid and childcare) will be the fastest growing sector over the next decade, with an 8.4 per cent predicted job gain.
If the BLS is right, healthcare and social services will add many millions of new jobs to the economy. That’s good. But the reasons for the gains aren’t so reassuring. As the bureau puts it, “growth in this sector is expected to be primarily driven by both the ageing population and the growing prevalence of chronic conditions such as heart disease, cancer, and diabetes”. In short, America is older and less healthy than ever before, and the costs associated with this are creating more spending.