While GDP barely improved, Obamacare spending has exploded.
As I mentioned recently, mainstream news outlets are admitting that the economy is grinding to a halt. A Washington Post article revealed that the economy only grew a fifth of a percentage point in the last quarter.
The gross domestic product grew between January and March at an annualized rate of 0.2 percent, the U.S. Commerce Department said, adding to the picture of an economy braking sharply after accelerating for much of last year. The pace fell well shy of the 1 percent mark anticipated by analysts and marked the weakest quarter in a year.
Now, the Beacon blog at the Independence Institute gives us some more information about that anemic growth.
GDP barely budged, increasing by a trivial 0.2 percent annualized. Although personal consumption expenditures increased at a much higher rate, the largest component of that increase was health services, which contributed 0.62 percent to the change in GDP. (Housing and utilities, at 0.59 percent, was second.) Investment spending and exports were in the tank.
Seasonally adjusted at annual rates, GDP increased by only $6.3 billion from the fourth quarter. Health services consumption, on the other hand, increased by $23 billion. This is a dramatic increase in a segment of GDP committed to a government-controlled and relatively unproductive sector of our economy.
Now the way GDP is measured (and the reason why GDP isn’t that meaningful) is that it adds up all spending. So, by that theory, the increase in healthcare spending is a good thing.
But is the theory reliable? If the government forced everyone to buy twice as many light bulbs, the theory would claim that we have increased GDP by increasing spending on light bulbs. But how can we claim these unwanted and unnecessary purchases actually create a better economy? It is quite possible that all this new Obamacare spending is, in fact, detracting from investment and exports.
What we have here, according to the Independent Institute, is “health spending crushing a stalled economy.” Obamacare is the gift that keeps on giving.
Or, rather, taking.