Excluding Obamacare, US Economy Contracted By 2% In The First Quarter

Tyler Durden's picture

As if the official news that the US economy is just one quarter away from an official recession (and with just one month left in the second quarter that inventory restocking better be progressing at an epic pace) but don't worry - supposedly harsh weather somehow managed to wipe out $100 billion in economic growth from the initial forecast for Q1 GDP - here is some even worse news: if one excludes the artificial stimulus to the US economy generated from the Obamacare Q1 taxpayer-subsidized scramble, which resulted in a record surge in Healthcare services spending of $40 billion in the quarter, Q1 GDP would have contracted not by 1% but by 2%!

The history of healthcare spending's contribution to GDP. The outlier needs no highlighting:

And here is the breakdown of overall Q1 GDP and just the contribution from healthcare. In other words as the "favorable boost" to the economy from this most epic instance of capital misallocation fades, expect the drag to GDP to be even more acute, and will almost certainly offset the benefits of "unharsh weather."

Source: Dept of Commerce

Comment viewing options

Select your preferred way to display the comments and click "Save settings" to activate your changes.
lordylord's picture

And gold drops.  Make sense?

GetZeeGold's picture



Take advantage of the lower gold prices....you're gonna need it to bribe the deathpanels.


I love my new VA healthcare.....I mean Obamacare. It's almost as fun as going to the DMV.

hedgeless_horseman's picture



Obamacare...of, by, and for the health insurance companies; guaranteeing profits and eliminating the competition...just like the Federal Reserve Act did for big banks 100 years ago.

Remember kids, bribery is against the law.

MillionDollarBonus_'s picture

My advice to any aspiring democratic nominee for 2016 is to commit to double healthcare spending during their term. Had we simply doubled our healthcare spending this quarter we would have offset the entire economic contraction. We need to invest ahead of the curve to keep the momentum in spending going. The flow of money is like the life blood of the economy and spending is like the heart; if it stops, the economy dies. 

Luckhasit's picture

And where do you intend to get that extra amount of money, that double down? Print it from thin air?

God, HH, that chart is scary.

MillionDollarBonus_'s picture

There's plenty of money to go around - we're one of the richest countries on earth. Let's tax a couple of CEOs and tech entrepreneurs and go after a few offshore accounts. 

Ignatius's picture

A few?  We should absolutely invade Grand Cayman.

Fuckin' Brits.

Ignatius's picture

MDB's logic is clear.  We also need ObamaCar, ObamaHouse, ObamaCollections, etc..

lordylord's picture

MDB also got more upvotes than usuall.  Very strange.  I think now that the spring college semester has ended, Obama's army is out in full force on the internet since they can't find any summer jobs.  It would also explain the increase in the hostile anti-libertarian pro-state comments I have noticed. 

Greenskeeper_Carl's picture

That's because most people have finally realized it is satire. Read it to yourself in the most sarcastic tone you can muster and it makes sense. Also, what he said is true. This govt spending is the lifeblood of our economy, and the EU. That, along with money printing and easy money policies from the fed are the only reasons the economy has maintained the illusion of growth since around 2000. Obviously this isn't healthy or sustainable, but technically it is true. We have been in a papered-over depression for over a decade. As I said, think of his posts as sarcasm

Pure Evil's picture

And don't forget ObamaWhores.

We wouldn't want another tragedy to happen like the one in Californikator where a prissy narcissistic spoiled rotten metrosexual is unable to have sex with any blonde that walks down the street.

Ignatius's picture

"And don't forget ObamaWhores."

Yes, it's what's kept me going.

intric8's picture

Yes MDB, with all the QE money helping to create loans for small business and spur hiring, i dont see why not. Who knows, maybe even acheive +1% growth and avert a technical recession! They can create money out of thin air, so they might as well spend it on stuff like healthcare too, no?

Buckaroo Banzai's picture

One of your best trolls in a while, MDB. Outstanding.

HelluvaEngineer's picture

Too bad no one is actually going to pay the bills from the providers.  All of this debt will be going 60, 90 days over very soon...not that I expect anyone to report on it.

Jumbotron's picture

"Remember kids, bribery is against the law."

That is unless you live in a Fascist state.  Then there is no such thing as bribery, therefore, no illegality.


" It's a big club...and you ain't in it ! "

                                    George Carlin

Jumbotron's picture

Exactly right back atchya on that post.  Fascism is the last recourse for corporations that should die on their own from their own incompetency....like Microsoft.


Ignatius's picture

" It's a big club...and you ain't in it ! "

                                    George Carlin


I never tire of that classic quote.

Ghordius's picture

for China, it makes sense... to set up the new gold bullion trading center of the world

The wheels on the bus are going to fall off's picture

Awesome, what is the current realistic expected GDP forecast for Q2?

Winston Churchill's picture


The fiscal drag of Obozo care has only just started.

With the correct deflator there has barely been any real growth since the tech collapse in


Never mind the seawater lapping your ankles, the Titanic is unsinkable.

Tjeff1's picture

Agree.  But I am stating the expected official "manipulated" number.

SDShack's picture

1 to 2% for Q2 GDP sounds about right. 0zer0care horror won't hit until Q3 when businesses know what their cost hikes will be. The real SHTF in Q4 when the premium hike notices go to employees, or worse, tens of millions of employees find their employer has dropped HC coverage, or cut full time workers to under 50 to avoid having to provide it. The sticker shock is going to be epic in Q4, followed by wallet shock in Q1 2015 as EVERYONE pays double digit increases in premiums for shitty 0zer0care. That is money that WON'T go to pay for retail goodies for the holiday shopping season, or any retail goodies in the future for that matter. 0zer0care will absolutely pull the plug on the life support of this economy in 2015.

Tjeff1's picture

USD up makes lots of sense too ?

q99x2's picture

We're done. We're toast. Ray Dalio said if the economies don't expand by 2 percent the whole system will implode. We're doomed. Fuck UCLA I'm joining the DHS. Somebody do something.I don't wanna go back to Pittsburgh.

Gumbum's picture

Now exclude QE as well and the numbers start to become horrifying..

Mentaliusanything's picture

More horrifying if its "adjusted" for Inflation. I can not figure that one out. Does inflation increase GDP because real costs rise or is it that GDP creates inflation?

Chicken or egg?.


orangegeek's picture

But annualized GDP is still on for 3.7%.



youngman's picture

Its funny how something that is going to be a huge drag on the economy..Obamacare..will add to the GDP

Agent P's picture

As a line item, yes.  To the net total, not so much. 

Gaius Frakkin' Baltar's picture

If you realize most of the USSA economy is bogus, it makes perfect sense.

SDShack's picture

So does spending on gas, food, and utilities. Last quarter, the biggest drivers of GDP were utility spending (bad weather) and HC. In bizarro govt world, these increased COSTS to consumers are seen as a positive. That's because consumers have to go into DEBT to maintain their lifestyle, which benefits govt overlords, the banks. So in bizarro world, 4% GDP is possible when you have soaring energy costs, HC costs, and food costs. And we all know that is coming courtesy of Fed QE ZIRP Deficit Spending, and Debt Monetization. Perpetual Ponzi to create the New Feudal World Order with TPTB being the Elites, while the masses are Debt Slaves.

Agent P's picture

"Excluding Obamacare".....now there's a happy thought. 

NOZZLE's picture

Can someone explain how increased spending on inflated medical services or insurance makes the nation wealthier?

JRobby's picture

Just another aspect of upward wealth transfer. Move along, nothing to see here......

madcows's picture

The insurance CEO's, etc... buy houses in the Hamptons, and hire illegals to do their laundry, cleaning, and yardwork.  The illegals take all that income and send it back to the native country.  President Obama takes a vacation in that country, brings home trinkets for the kids, and Voila, you're rich.

replaceme's picture

So, feeling like I'm pushing in all my chips on a pair of 3s, I say 'buy buy buy MOAR!' and hope.  And change.

madcows's picture

Or, maybe Obamacare exacerbated the shrinkage.  All that cash flowing into the healthcare coffers came out of consumer purchases.

"Sorry kids, no new clothes this season.  Obama needed us to payback his election campaign contributors, aka the health insurance industry."

SDShack's picture

The only way to maintain your lifestyle with shrinking wages, and increased cost is to either go into DEBT, or join the govt FSA. People have maxed out their debt, so it's Disability, Welfare, EBT, Unemployment Benefits, Medicaid, etc. Which leads to Govt Debt. Either way, it's more DEBT, which is all the bankers want. Throw in a printing press, and it is a Perpetual Ponzi, which is the Bankers Wet Dream, and a nightmare for everyone else.

yogibear's picture

THe econnmy is being supported by ever-higher amounts of Federal Reserve printed money. Back-door purchases of US treasuries while announcing tapering.

All smoke and mirrors to hide a destructive, non productive money printing and debt.

max2205's picture

Somebody hit the Pomo button. ..we are stalling on the spy

All is chosen's picture

Onward, & err.... upward zzzzzzz

Pure Evil's picture

I think its FORWARD.............over the ObamaCliff.

Last of the Middle Class's picture

The truth of the matter is that since the late 90's if you exclude health care there was little or no economic growth. Then someone decided to take that last engine of growth and nationalize it taking over the last productive part of the economy and turn it over to government control. The result is absolutely predictable. This is the death rattle economy. How long it goes on depends on a lot of factors but eventually if we don't kill off the cancer that is government control we're doomed to this nonsense being repeated quarter after quarter. The unknown they can't control is how many consumers are losing purchasing power to their "non inflation". That will eventually decide all our fate.

ejmoosa's picture

Your headline is misleading.

Without the effects of Obamacare, this economy would not be doing worse, but better.  

Twice as much growth woud have occurred without the downsizing of Obamacare upon our economy.