Gross Domestic Product (GDP) Decline – Victim of Obamacare?

Gross Domestic Product (GDP) Decline – Victim of Obamacare?

Reuters reported, “The Commerce Department said on Wednesday gross domestic product fell at a 2.9 percent annual rate, the economy’s worst performance in five years, instead of the 1.0 percent pace it had reported last month.” Consumers and investors may take some comfort in economic forecasts that project growth may be forthcoming. Also, as Reuters cautions, “Sharp revisions to GDP numbers are not unusual as the government does not have complete data when it makes its initial and preliminary estimates.”

While some economists have suggested that the GDP decline stems from the impact of the unusually frigid winter on economic activity, the government has yet to confirm this cause-effect relationship. Of particular interest, the Reuters’ article notes, “The latest revisions reflect a weaker pace of healthcare spending than previously assumed, which caused a downgrading of the consumer spending estimate.”

While weather may have a critical impact on GDP, it is generally assumed that government policies can weigh heavily on its formation. One doesn’t have to look beyond Obamacare to identify potential reasons for reduced consumer spending. The uncertainties and insecurities generated by this new, mammoth government program have certainly affected the willingness and ability of consumers to rally around health care consumption. It will be interesting to trace the path of health care consumption and its consequent impact on GDP as this gargantuan program continues to unfold.

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