As the federal government has decreased its spending over the past few years, the public sector has not contributed much, if anything, to GDP and the US economy’s growth.
There is one implemented policy, however, that appears to be helping.
Aneta Markowska, an economist at Societe Generale, broke down just how consumers are spending their money that they have saved since the drop in oil prices.
The largest increase in consumer spending since gas prices have dropped, according to Markowska, has been on healthcare.
“In nominal terms, household spending on healthcare averaged 3.9% between 2010 and 2013,” wrote Markowska in a note to clients Thursday.
“It began to accelerate in the first half of 2014 and has averaged at 5.2% since then. Importantly, this pickup in healthcare spending was not driven by higher costs; real spending in this category accelerated from 1.9% in 2010-2013 to 3.9% thereafter.”
This would indicate that Americans have been not only been spending more because of increased costs, but also intentionally allocating more of their wallet to the sector.
To match the increased spending, the healthcare sector’s labour market has also been booming.
“Employment data also corroborates this: as shown in chart 3, the healthcare sector produced about 240,000 jobs per year between 2010 and mid-2014,” said the note. “Since then, it has averaged at 354,000/year and the sector is currently producing about 500,000 jobs annualized.”
Now there are a few reasons for the increase, the most notable of which is the passage of the Affordable Care Act, or Obamacare. Markowska notes that the growth in real spending closely matches the 4% increase in the number of Americans with health insurance since the implementation of the Affordable Care Act in 2012.
This increased consumer spending and labour availability is a net positive for the economy, according to Markowska.
“So, although increased demand for healthcare may have squeezed other forms of spending, it did produce positive economic effects,” said the note from Societe Generale.
This is just one piece of Obamacare’s impact, there are many other factors going into it and nominal spending on healthcare premiums are certainly worth considering, but according to Markowska, there is reason to believe the bill has been helpful to the US economy.