The ‘one-legged stools’ holding up a fragile economy

The U.S. economy is growing, but economists worry that its strength is too narrowly focused.

January 27th at 5:00 a.m. EST

---

(Illustration by Anna Lefkowitz/The Washington Post)

By Abha Bhattarai and Alyssa Fowers

On paper, the economy is booming.

Low unemployment, strong consumer spending and steady business investments have helped fuel the largest expansion in years. The U.S. economy grew at a robust annual rate of 4.4 percent in the most recent quarter, defying fears of an imminent slowdown.

Get a curated selection of 10 of our best stories in your inbox every weekend.

But economists caution that growth is increasingly concentrated. The result is a steady but fragile economy, built on a series of narrowing pillarChanges since 2022

CONSUMER SPENDING +3M jobs Top 10% income

LABOR MARKET +$2T Health care

INVESTMENT RETURNS +$20K Social Assistance

Source: Federal Reserve Board, Census Bureau, Bureau of Economic Analysis, Moody’s Analytics,

---

Bureau of Labor Statistics, Bloomberg

“There are one-legged stools everywhere you look and yet when you put it all together, we’re still standing,” said Diane Swonk, chief economist at KPMG, who began using the phrase last summer to describe the economy. “The question is, how long can we keep ourselves upright?”

The three pillars holding up the U.S. economy.

Health care jobs are propping up the labor market

The job market has been surprisingly sturdy, even in the face of high interest rates, changing economic policy and looming uncertainty. The unemployment rate, at 4.4 percent, is near historic lows.

But the bulk of the job market’s recent gains has come from one industry: health care.

Health care and social assistance positions accounted for 97 percent of the 733,000 private-sector jobs created across the economy last year. Hospitals, doctor’s offices and residential care facilities added hundreds of thousands of positions in 2025, helping make up for losses in manufacturing, transportation and white-collar professions such as advertising and computer science.

“It’s really impressive how much job growth has been driven by health care and social assistance,” said Daniel Zhao, chief economist at careers site Glassdoor. “It’s the last remaining pillar of growth.”

But having nearly all job growth concentrated in one sector is risky for the economy, he added. It’d be much better if gains were spread across a variety of industries, especially given that health care hiring has slowed in recent months. Employers added an average 421,00 health care and social assistance jobs a month in the first half of 2025; in the second half, that figure fell to 363,000.

The wealthiest Americans are driving spending

The post-pandemic recovery has favored the richest Americans. Fast-rising home values and a rapid run-up in stock valuations have disproportionately padded the fortunes of the wealthiest, allowing them to keep spending in a way that’s lifting the entire economy.

The top 10 percent of Americans — those earning $275,000 or more — now account for a record 45 percent of all spending, up from about 39 percent before the pandemic, according to Moody’s Analytics. That imbalance helps explain why spending on extras such as dining out and travel has kept rising over the past year, even as many households say they’re cutting back.

“There’s been a dramatic narrowing: The folks at the top account for a much higher share of spending than the folks in the bottom 80 percent, and that gap is widening,” said Mark Zandi, chief economist at Moody’s Analytics. “It very clearly shows that the economy is dependent on spending by the folks at the top.”

Rising consumer spending has been a major driver of growth in recent quarters, accounting for nearly 70 percent of the country’s gross domestic product.

But after adjusting for inflation, spending by lower- and middle-income Americans has largely stayed flat since the pandemic, Zandi said. The top 20 percent, though, are splurging: Their spending is up by more than 4 percent per year since 2020.

That dynamic is worrisome, Zandi said — both because it leads to growing disparities, and also because so much of the wealthiest Americans’ recent spending power is tied to the whims of the stock market.

---

View this Washington Post article CLICK HERE