Q4 GDP 2013 Growth Revised To 2.6% Due Consumer Spending In Healthcare

Q4 2013 growth was revised upward to 2.6% from 2.4% as a result of consumer spending. The consumer spending was not in durable good products, but the expenditures in health care spending can be attributed to the government revision of upward tick in GDP growth. The Affordable Health Care Act was not mentioned as the variable in the increase in consumer spending in healthcare, but the 3.3% increase in healthcare expenditures is a variable not to be overlooked. The new healthcare law is evolving into a program of reduced healthcare cost and cost savings in Medicare to a burden for the consumer as a mortgage payment or student loan debt. A government mandate was suppose to be legislation to help bring better insurance options for the public, and the expansion of an umbrella was suppose to bring more uninsured into the program. The expense and choice under Obamacare is startling for an individual who supports the change in the current healthcare system, but this change is a burden. GDP growth is being influenced by the burden on the consumer, the growth in GDP does not impact the consumer in a positive matter. The healthcare fiasco can claim the rise in consumer spending instead of being a real negative instead the steam engine behind GDP growth in the last three months of 2013. Interesting is the word to best describe this statistical twist of numbers into being a benefit.

U.S. GDP grew at 2.6% pace in Q4
Paul Davidson, USA TODAY 9:03 a.m. EDT March 27, 2014
The economy grew more briskly than the government previously estimated in the fourth quarter on stronger consumer spending, among other factors.

The nation’s gross domestic product in the last three months of 2013 increased at a 2.6% annual rate, up from the previous estimate of 2.4%, the Commerce Department said Thursday. That’s the government’s third and final estimate of fourth-quarter growth.

Economists had estimated that today’s revision would show 2.7% growth. For all of 2013, the economy grew at a 2.6% rate, slightly more than the 2.5% previously estimated.

Consumer spending increased at a 3.3% annual pace, partly on stronger health care outlays, up from the previous 2.6% estimate. Also, state and local government spending and exports rose more rapidly than initially thought. Business equipment expenditures — a key gauge of companies’ appetite for capital spending — also picked up more than previously estimated.

“The data suggest that the economy had slightly more momentum than previously thought before it was hit by extreme weather at the start of 2014,” says Chris Williamson, chief economist of Markit.

The economy picked up solidly in the second half of the year, but much of the expansion was the result of aggressive stockpiling by businesses. That led to a reduced need for firms to replenish shelves in the current quarter which, along with unusually cold and snowy weather, is expected to yield more tepid growth early in 2014.

But many analysts expect the economy to pick up steam the rest of the year on higher household wealth, lower debt and an accelerating housing recovery.