What Americans Spent The Most Money On In The Third Quarter

One month ago, when the BEA released its first estimate of the hurricane-impacted economy during the third quarter (which came in at a stronger than expected 3.0%)  we were surprised to report that according to the Department of Commerce, in the third quarter the biggest driver of marginal spending was car sales (technically Motor Vehicles and Parts), which increased by $15.6 billion to $463.5 billion. Which, as we said at the time and considering recent US and global automakers data, was paradoxical in light of the ongoing decline in overall sales in the second half of 2017, and it was far too early to expect the post-hurricane spending spree. It was also surprising because as Americans splurged on cars, they pulled back on gasoline purchases, which was the single biggest detractor to spending, subtracting a marginal $3.5 billion in PCE, to $283.6 billion.

 

In any case, we concluded by saying that "we now await for the revisions to this initial estimate over the coming two months, because something tells us that the auto spending spree will be thoroughly revised well lower."

One month later, when the BEA released its second Q3 GDP estimate, it appears we were right: the contribution from motor vehicles was indeed revised lower, but not nearly as dramatically as we expected, only from a marginal increase of $15.6 million to $13.5 million.

And yet, many other line items did see a downward revision, which means that something had to increase sharply to compensate for the downward revisions among other spending components. Sure enough, something did: the old faithful "plug" which has saved the US economy every quarter for the past 4 years: Healthcare, or as it is better known, Obamacare, because with Trump failing to repeal Obama's signature health law, it means that Healthcare will merrily "contribute to GDP" for years to come, by being the single biggest marginal spending item for the foreseeable future.

Finally, for a comparison of how dramatically the contribution of "Healthcare" was revised higher, here is a chart showing side by side the change in spending among all key line items. One can almost hear the orders "from above" to make GDP 3% or higher at any cost when looking at this chart.

Comments

SDShack Mimir Wed, 11/29/2017 - 14:51 Permalink

You cannot possibly be this stupid, so you have to be a troll. But just in case you are not, the first truth is 0zer0care was WRITTEN by the insurance lobby, FOR the insurance lobby. The entire law is full of subsidies and kickbacks for the purpose of increasing profits for the lobbies you mention. The reason prices are going up is by DESIGN. The greatest 0zer0 lie was always "You can keep your doctor, you can keep your plan, and 0zer0care will save the average family $2500/year". All proven to be false even before the law was actually passed, and completely proven to be a total lie once the law was implemented. 0zer0care is WORKING EXACTLY AS IT WAS INTENDED!

In reply to by Mimir

bpgnp210 Justin Case Wed, 11/29/2017 - 13:21 Permalink

Healthcare spending, healthcare spending per capita and healthcare cost inflation were increasing before Obamacare and continue to increase after (some links to charts linked below).  Repealing the ACA isn't going to decrease anyone's individual healthcare cost, although it will eliminate the "fine" for those who choose not to buy insurance.... so when those that do not have insurance go to the hospital they can spread their bad debt across those that do have insurance... or the Fed government picks up the tab in the form as DSHs... which we pay in the form of taxes.  I am interested in your argument why repealing the ACA (which I am fine with) will reduce HC costs.  I'm all for repealing the ACA but I think that's the wrong diagnosis for what's increasing healthcare costs.https://fred.stlouisfed.org/graph/?g=fVLthttps://fred.stlouisfed.org/gr… 

In reply to by Justin Case

LikeyMikey bpgnp210 Wed, 11/29/2017 - 13:49 Permalink

Government with their paws in Haelthcare is what is causing rising costs.  Medicare controlling costs, Medicaid controlling costs and regulation for bringing new drugs to market are all driving prices higher.  Getting uncle sugar out of the mix will drive prices down. Want proof?  Look at three scenarios and make your own decisions......1) American Indian "Guaranteed Healthcare" paid 100% by the US Federal Government2) Medicaid and Medicare which controls (distorts) prices in the market which then drives up costs to the private healthcare providers and Insurance companies3) Cosmetic Healthcare which has no personal insurance or government programs. Prices continue to go down while quality goes up Think about it... when is the last time that Government intervention has EVER Lowered prices and inproved quality with anything?Government is NOT the answer unless it is to get them out of the way! 

In reply to by bpgnp210

bpgnp210 LikeyMikey Wed, 11/29/2017 - 16:07 Permalink

Didn't follow your "American Indian" comment but your cosmetic surgery comment is interesting.  I think its a little more complicated though.  It would be interesting to see the inflation in services that have been around for decades vs. the inflation due to the options/number of treatments for everything from a hangnail to a heart condition that didn't exist decades ago.  I've never seen that data.  Overall our population is getting fatter... a lot fatter and we're pumping more drugs in them so they live longer.......that's not going to lower costs. 

In reply to by LikeyMikey

Miffed Microbi… Silver Savior Wed, 11/29/2017 - 13:11 Permalink

You must be self employed. At least in California employers require proof of insurance.

I work in a hospital system that provides stellar car for an affordable cost. I am healthy but my husband has a chronic disease. I have no option but to stay at my job which is unfortunate because I wish to leave Cali. We'd be bankrupt if we had no insurance covering his treatment.

Miffed

In reply to by Silver Savior

resistedliving venturen Wed, 11/29/2017 - 12:58 Permalink

do you see "a million a year"?  It's Pharma man and our addictive personalityAverage U.S. Physician Salaries by Specialty Allergy and Immunology$296,705 Anesthesiology$357,116 Cardiology$436,849 Colon and Rectal Surgery$343,277 Dermatology$400,898 Emergency Medicine$320,419 Endocrinology$217,610 Family Medicine$227,541 Gastroenterology$379,460 General Surgery$360,933 Hematology$376,660 Infectious Disease$205,570 Internal Medicine$223,175 Medical Genetics$158,597 Medicine/Pediatrics$205,610 Neonatology/Perinatology$290,853 Nephrology$306,302 Neurology$243,105 Neurosurgery$609,639 Nuclear Medicine$290,639 Obstetrics & Gynecology$315,295 Occupational Medicine$229,450 Oncology$341,701 Ophthalmology$343,144 Orthopaedic Surgery$535,668 Otolaryngology (ENT)$369,790 Pathology$302,610 Pediatric Cardiology$303,917 Pediatric Emergency Medicine$273,683 Pediatric Endocrinology$157,394 Pediatric Gastroenterology$196,708 Pediatric Hematology & Oncology$192,855 Pediatric Infectious Disease$163,658 Pediatric Nephrology$183,730 Pediatric Pulmonology$218,106 Pediatric Rheumatology$200,027 Pediatrics$206,961 Physical Medicine/Rehab$278,283 Plastic Surgery$407,709 Preventive Medicine$270,888 Psychiatry$227,478 Pulmonology$317,323 Radiation Oncology$418,228 Radiology$404,302 Rheumatology$244,765 Thoracic Surgery$471,137 Urology$381,029 Vascular Surgery$428,944

In reply to by venturen

Silver Savior Wed, 11/29/2017 - 10:30 Permalink

The gov should pay all our car expenses so we have money for other things like rent hyper inflation. Better yet the gov should pay that too. It's all just basic needs.

Consuelo shankster Wed, 11/29/2017 - 10:47 Permalink

  They can't...And that was known the moment that Mr. Roberts (goes to Washington...), gave the nod to the 'tax', based upon the catch-all commerce clause...Which was probably more like:'Hey John, we have some video of you and your little twink on the side, so --- might be best for you to do the right thing, Ok...?     See you at the dinner party...!!'

In reply to by shankster

J J Pettigrew Wed, 11/29/2017 - 10:33 Permalink

Obamacare is not healthcare.....it is health insuranceand health insurance is lowly weighted in the CPIwhy is it weighted with firewood and magazine prices? two non essentials?

lasvegaspersona Bill of Rights Wed, 11/29/2017 - 10:48 Permalink

This is probably not the right place for such scolding but you are correct.Intermittent fasting (pick your favorite plan) and reduction of carbs can lead to less insulin resistance (which is Type2 diabetes). Lose that gut and reduce your med count and prolong your productive healthy life...may even help with mental function in later years.Most of my patients simply will not do anything that is hard. The idea of skipping a meal is impossible.For those with a modicum of discipline (hey it isn't easy but you don't reaaly suffer saying no to a donut) the rewards are great.

In reply to by Bill of Rights

FreeNewEnergy Wed, 11/29/2017 - 10:42 Permalink

Healthcare basically tripled from the first estimate to the second, from ~$7 B, to ~$21 B.So, are these estimates really any good.Consider, if you had a business, and your managers came in with estimates on their individual sectors, and one was triple the previous estimate, would you be suspicious of that manager, and, by extension, all of the managers?Using that metaphor, I'd say all the figures used in calculating GDP (a poor estimation of the general health of an economy, IMO) are suspect. Further, possibly all stats and guesses by .gov are fudged, goal-seeking, or otherwise "massaged."I don't believe any of their lies. 

Kefeer Expat Wed, 11/29/2017 - 12:32 Permalink

And if one were made about you?  BTW - there is one on you and each of us to whom we will be accountable, for if you are a creature (and you are) living in a creation (and we do), then you have what?  A CREATOR - Law of Cause and Effect where God is the First Cause.If you live in a house, then there is a what?  A builder.

In reply to by Expat