Government spending on education and health—two growth areas—might be enough to buoy the economyA consumer crunch now seems inevitable. The housing market is in free fall, and home-equity loans, which many people used as piggy banks, are becoming more expensive and harder to get. Now big credit-card issuers such as American Express (AXP) and Citigroup (C) are reporting a rise in delinquencies, which will lead to tighter lending standards. The net result will be a squeeze on consumer credit that could bring even irrepressible shoppers to a halt.
But there's a surprising force that could keep the bottom from falling out of the economy: the $3.5 trillion health and education job machine, which created 640,000 new jobs in the last year alone. Propelled by aging baby boomers and rising student enrollments, hospitals and schools are still hiring while almost everyone else is cutting back.
Could adding more nurses, teachers, and hospital orderlies really hold off a recession? The answer is yes—with an asterisk. What people don't realize is that health and education combined make up the single largest source of jobs in the U.S., employing 28 million people, or about 20% of the total workforce. What's more, government funds support many of these jobs, either directly or indirectly, making them less subject to the business cycle.
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