Health-Care Industry Debt Turns into ‘Systemic Recession Risk’

Debt binge hits its limit, with big impact on overall economy.
Sector booms and busts have historically been driven by speculation and over-borrowing, often triggering regional or even national recessions. Textbook examples include the 2014 Energy and 2008 Financial sector collapse. In both of these instances, fallacies such as perpetual $100 oil and ever rising home prices drove rampant speculation, overinvestment, and unsustainable debt buildup.
So warns John Burns Real Estate Consulting, in a new paper, ‘Industries at Risk and Implications for Housing.’
This time, three sectors stand out where ‘a similar pattern of unsustainable growth has driven rapid expansion’ since the end of the Great Recession: technology, automotive (whose current travails I keep dissecting), and health care.
But health care poses the biggest ‘systemic recession risk’ to the US economy, according to the report. After employment in the sector has soared 113% since 1990, it accounts for 16% of private sector jobs, up from 10% in 1990.
[T]thus a correction to the industry will likely cause a slowdown for the national economy. Several large housing markets have an even bigger concentration of jobs tied to the Health Care industry and will be disproportionately hit by a Health Care slowdown, including: Philadelphia, Boston, New York, and Nashville

This post was published at Wolf Street on Mar 27, 2017.