US Job Market on Life Support: Healthcare Masks Deep Recession
The headline numbers suggest the US labor market is bending but not breaking. However, a look beneath the surface reveals a much darker reality: the productive economy is already contracting, and the only thing keeping the job market afloat is a massive, non-cyclical boom in the healthcare sector. When you strip out this one industry, the US labor market isn't just cooling, it is in a recessionary freefall.
❍ The "Real" Economy Is Shedding Jobs
The most alarming metric is the performance of the job market when excluding the healthcare and social assistance sectors.
-164,000 Jobs: Over the last four months, US nonfarm payrolls (excluding healthcare/social assistance) have dropped by -164,000.
Worst Since 2020: This represents the largest decline in this core segment since the onset of the pandemic.
Recession Signal: In previous economic cycles, weakness of this magnitude in the broader economy has rarely been seen outside of officially declared recessions.
❍ Healthcare: The Only Engine Left
The divergence between healthcare and the rest of the economy has reached extreme levels. In 2025, the private sector added a total of +733,000 jobs. However, the composition of this growth is incredibly lopsided:
Healthcare & Social Assistance: Accounted for +713,000 of those gains.
The Rest of the Economy: Contributed a meager +20,000 jobs.
This means that virtually all net job creation in the US private sector last year came from hospitals, nursing homes, and social services. The cyclical, productive parts of the economy, manufacturing, tech, construction, and finance, were effectively stagnant or shrinking.
❍ A Stark Reversal from Early 2025
The speed of this deterioration is evident when comparing the current trend to the start of last year. At the beginning of 2025, the "rest of the economy" was adding jobs at a robust pace of +500,000. That momentum has completely evaporated, replaced by a contraction that is currently being masked by the defensive nature of healthcare hiring.
Some Random Thoughts 💭
This is what a "hidden recession" looks like. Healthcare jobs are essential, but they are largely driven by demographics (an aging population) and government spending, not by economic productivity or consumer demand for goods. When an economy relies 97% on healthcare for its job growth (713k out of 733k), it isn't growing; it's just aging. The fact that the "real" economy lost 164k jobs in four months suggests that for the average worker outside of the medical field, the recession is already here.
