Gross Domestic Product: Is Health Spending Figured Out?
Health spending was a non-issue in the Department of Commerce’s release of the advanced estimate of second-quarter GDP, which came in at four percent (annualized). Much of the second quarter’s improvement was business spending and consumer spending on durable goods. Health spending increased by a muted 0.08 percent. The final estimate for first-quarter GDP was improved to minus 2.1 percent, up from minus 2.9 percent.
What is a relief is that the final estimate for health spending in the first quarter, minus 0.16 percent, was unchanged from the previous estimate. Previous estimates of first-quarter GDP were whipsawed by huge changes in the health estimate, and many were concerned that the Department of Commerce had no idea how to measure health spending under Obamacare. Yet more changes in the estimate were feared.
Advanced estimates of GDP are always subject to significant revision, but the previous uncertainty about health spending was unprecedented. If the Department of Commerce has figured out how to measure health spending in the new regime, at least that’s one Obamacare uncertainty that we can stop worrying about.
Personally, I’m not confident the Commerce Dept has improved at calculating healthcare spending under the ACA in the past three months! We know the CBO cannot even score the law any more, and the business community is full of uncertainty because the law is constantly being revised unlawfully by the administration, and it faces even more court tests in the future.
Their advanced estimate is just another conclusion they’ve reached for now. By how much will it change when they do another “advanced” estimate?
This Q2 growth was fully anticipated on this blog, but the cause was going to be attributed to higher health spending. Thus far, that doesn’t seem to be the reason. Of course, I’m sure we are going to see rather varied GDP revisions upcoming.
Every time there are GDP revisions, the numbers vary. It will be no difference from now into the future.
“If the Department of Commerce has figured out how to measure health spending in the new regime, at least that’s one Obamacare uncertainty that we can stop worrying about.”
Somehow I doubt they have figured this out.. Let’s not give the Department of Commerce too much credit just yet.
We have to be optimistic about something, don’t we? It’s not the poor statisticians at the Department of Commerce who gave us Obamacare.
“The final estimate for first-quarter GDP was improved to minus 2.1 percent, up from minus 2.9 percent.”
I wonder if this is factual that it improved, or it is damage control?