For some reason, there’s been a fair amount of attention paid to the impact of Q1’s decline in health care growth on the latest GDP numbers, which were pretty dismal. The Wall Street Journal even figured out a way to blame it all on Obamacare. This is nonsensical, and in any case, the question of what happened is almost certainly pretty simple. Here’s Dean Baker:
The NYT noted that a sharp drop in health care spending reduced the first quarter growth rate by 0.16 percentage points. It is important to recognize that this drop followed a surge in health care spending reported for the fourth quarter of 2013 that added 0.62 percentage points to growth in quarter….It is likely that the data overstated the actual increase in spending in the fourth quarter and therefore also overstated the drop in the first quarter. The average impact of health care spending on growth for the two quarters taken together is almost the same as over the prior four quarters.
Yep. I’ve illustrated this with a gigantic diagram showing raw health care expenditure figures below. In short, the Q1 decline is almost certainly just statistical noise. Pay no attention to the hyperventilating.