Tags: healthcare | consumer | spending | GDP

GDP Report Shows Government Binging While Consumers Struggle

By    |   Wednesday, 07 May 2014 08:04 AM

Economic growth slowed to 0.1 percent in the first quarter, but that is because consumers are being forced to make choices. The federal government is still spending with little regard to the deficit.

Some analysts pointed out that without increased healthcare spending the economy would have contracted. This ignores the reality that consumers have limited dollars and healthcare spending is no longer discretionary. The government mandates insurance, and many consumers went to see doctors in the first quarter as they tried to get some return on their insurance spending.

In addition to spending on healthcare, there was a higher-than-average increase in spending on insurance and utilities. Other than those areas, consumer spending rose slower than average.

GDP confirms that consumers are struggling and government regulation is causing the economy to grow slowly. We are now forced to spend more on necessities, like utilities, which are charging more to meet stricter clean air standards, and health insurance, which is inflated by Affordable Care Act regulations. Given limited resources, consumers cut back in other areas.

Government, on the other hand, cut back only on defense, where spending fell 2.4 percent in the most recent quarter. Nondefense spending rose 5.9 percent. Overall, the federal government spent 0.7 percent more in the first quarter of 2014 than it did in the previous quarter.

As consumers spend money where they are forced to, the economy will become as inefficient as the Department of Motor Vehicles and 0.1 percent growth will become more common.

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MichaelCarr
Economic growth slowed to 0.1 percent in the first quarter, but that is because consumers are being forced to make choices. The federal government is still spending with little regard to the deficit.
healthcare, consumer, spending, GDP
248
2014-04-07
Wednesday, 07 May 2014 08:04 AM
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