Tags: GDP | Obama | growth | subsidy

Obamacare Hit to GDP Becoming a Problem for Economy

By    |   Friday, 01 May 2015 08:47 AM

Economic growth in the first quarter came in well below expectations. Headlines indicate GDP grew 0.2 percent in the first quarter. As always, the headline number is never the full story.

There are a number of ways to measure GDP. The most widely reported version of the report uses real GDP, which is adjusted for inflation. Last quarter, real GDP grew by 0.2 percent. An alternative is constant dollar, or nominal GDP, which eliminates the adjustment for inflation. Usually, an inflation adjustment will lower real GDP relative to the constant dollar calculation.

In the most recent report, GDP in constant dollars increased just 0.1 percent in the first quarter, an amount equal to $6.3 billion. That is the actual amount of the increase in the economic activity without inflation adjustments.

Surprisingly real GDP is higher than the nominal GDP is. This is because the data assume there was deflation of 1.5 percent in the first quarter. While consumers probably noticed lower gas prices, many saw annual increases in rent, taxes, utilities and other unavoidable expenses take effect.

Deflation will most likely be adjusted in the GDP revision process that will now begin, so we won't know what real GDP is for months. But we do know Obamcare hurt the economy.

H&R Block reported about two-thirds of taxpayers were hit with a bill because their insurance subsidy was too high. The average bill for the subsidy was $729 for about 7.3 million taxpayers. This reduced consumer spending by about $8 billion, assuming the money would have been spent.

The White House cheers all economic growth, even the $6.3 billion we saw in the first quarter. They ignore the $8 billion in growth, one aspect of their policies created.

The economy is now feeling the pain of President Obama's policies and that could increase. Now is an excellent time to prepare for the inevitable recession and bear market that Obama has been working toward.

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MichaelCarr
Economic growth in the first quarter came in well below expectations. Headlines indicate GDP grew 0.2 percent in the first quarter. As always, the headline number is never the full story.
GDP, Obama, growth, subsidy
322
2015-47-01
Friday, 01 May 2015 08:47 AM
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