Q1 GDP Down 2.9%: Admin says – meh
Today we learned that the Gross Domestic Product of the United States decreased by 2.9% in the first three months of 2014 – a number greatly different than dismal .1% increase the administration reported initially.
How could this be? According to the Huffington Post Obamacare had just saved the economy from contraction.. or something.
As the U.S. economy teetered on the brink of contraction in the first quarter, one thing stood out. Healthcare spending increased at its fastest pace in more than three decades.
That surge is attributed to the implementation of President Barack Obama’s signature healthcare law, the Affordable Care Act, also known as Obamacare. Because of Obamacare, the nation narrowly avoided its first decline in output in three years.
After the report showing that things were not so rosy, the excuses came fast and furious – no pun intended – from the White House, liberal news and even some economists. The weather was the cause.
Unfortunately for the apologists, most economist believe that the weather only affected the economy to the tune of about 1% of GDP – so where did the rest go?
According to the Wall Street Journal, some, but not all, appears to come from healthcare spending:
Spending on health-care services declined at a 1.4% annualized pace in the first quarter, compared to an earlier estimate of a 9.1% increase. That revision contributed to a revision of gross domestic product to a 2.9% annualized decline from an earlier estimate of a 1% decline.
The WSJ report tells us that even more pain is yet to come thanks to Obama’s attack on one of the largest parts of the American economy:
Michael Feroli, a J.P. Morgan Chase economist, said spending increases related to the new health-care law that didn’t show up in the first quarter “may ramp up more gradually throughout the year.”
For the second quarter, housing starts are down, inventories are down… heck, everything is down. Even the Federal Reserve isn’t acting like Americans are experiencing a recovery (as if they don’t know it.)
The real test will be the second quarter numbers. If we get two quarters of negative growth, Obama will have a recession he’ll get to call his own. Then again, we know he’ll never take the blame so we’ll quietly await Obama’s version of the “Malaise” speech while we all sit back and “eat cake” as instructed by our great leader.