Posted on 04/30/2014 7:14:28 AM PDT by kabar
The U.S. economy slowed in the first quarter to one of the weakest paces of the five-year recovery as the frigid winter appeared to have curtailed business investment and weakness overseas hurt exports.
Gross domestic product, the broadest measure of goods and services produced across the economy, advanced at a seasonally adjusted annual rate of 0.1% in the first quarter, the Commerce Department said Wednesday. Economists surveyed by The Wall Street Journal had forecast growth at a 1.1% pace for the quarter.
The broad slowdown to start the year halted what had been improving economic momentum during much of 2013. In the second half of last year, the economy expanded at a 3.4% pace. The first-quarter reading fell far below even the lackluster average annual gain of near 2% since the recession ended.
(Excerpt) Read more at online.wsj.com ...
Sorry I read your comment wrong as I was trying to answer while on a call (stupid of me). Business Insider just posted an article on healthcare spending and GDP that I’ll post later.
No it is not a good thing when half the PCE comes as a result of Obamacare. Without it GDP would have been negative.
Frigid winter aka Recovery plan.
Spending on health care grew an astounding 9.9% in the Bureau of Economic Analysis' advance estimate of first-quarter GDP.
It's the biggest percent change in health-care spending since 1980, when health-care spending jumped 10% in the third quarter. Analysts said it's primarily due to a consumption boost from the implementation of the Affordable Care Act. Adjusted for inflation, America is spending more on health care than ever before.
Personal consumption grew by 3.0%, about half of which was due to the growth in health-care spending, said Ian Shepherdson, chief economist for Pantheon Macroeconomics.
"If health-care spending had been unchanged, the headline GDP growth number would have been -1.0%," Shepherdson said.
A BEA representative said the uptick "reflects additional spending associated with the implementation of the Affordable Care Act."
The first-quarter advance estimate reflects spending from January through March, the first three months when millions of people who gained insurance by signing up on exchanges established by the law or by qualifying for Medicaid coverage under the program's expansion.
Jared Bernstein, the former chief economist to U.S. Vice President Joe Biden and now a senior fellow at the Center on Budget and Policy Priorities, speculated that the growth was more likely associated with the Medicaid expansion at this point.
Sign-ups through the exchanges exploded in March, the last month of the first open enrollment period. Of the more than 8 million people who eventually enrolled in insurance plans, nearly half signed up in March or in a special two-week extended period in April. This means the uptick in health-care spending could be even bigger next quarter.
The detailed consumption data in the advance GDP report displays that spending on doctors and hospital services began to rise rapidly last fall, when the law known as Obamacare was implemented.
"Both are now running at more than twice their pre-Obamacare trend, indicating that pent-up/hidden demand for healthcare was huge," Shepherdson said.
"Next question: How long will it last?"
Here's a chart from Pantheon that shows the growth over the past year in spending on doctor and hospital services, the two factors that dominate the health-care portion of GDP: Obamacare chart
Ian Shepherdson/Pantheon Macroeconomics
Here's a chart from Business Insider's Andy Kierz that shows the annualized quarterly change since 1980: Health care spending
Andy Kiersz/Business Insider
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