We often refer to the administration’s regulatory meddling as a retardant, a primary reason we linger. One need only glance at Obamacare and its impact to understand this point.
Since Sep/2013 health care service spending has increased on the order of 0.7% monthly (source – BEA) and most of the increase is due to rising out-of-pocket medical spending and higher premiums. A conservative estimate is that Obamacare has triggered a $250bl shift in household budgets so that medical services as a percent of consumer spending are now at a 24 year high, or 24.3%. Last year that stood at 23.5%, a 4 year low.
This is likely the reason real consumption in Q1 is moving along at a meager 1.5% annual growth rate, the weakest in years. From our friends at FTN Financial we see that some 80% of the increase in spending is going to health and insurance; consumption of the rest is growing by only 0.3%.
Retailers are paying the price for Obamacare. This is one reason that in past sketches we have debunked the weather excuse from the get go.
Robert Craven
Since Sep/2013 health care service spending has increased on the order of 0.7% monthly (source – BEA) and most of the increase is due to rising out-of-pocket medical spending and higher premiums. A conservative estimate is that Obamacare has triggered a $250bl shift in household budgets so that medical services as a percent of consumer spending are now at a 24 year high, or 24.3%. Last year that stood at 23.5%, a 4 year low.
This is likely the reason real consumption in Q1 is moving along at a meager 1.5% annual growth rate, the weakest in years. From our friends at FTN Financial we see that some 80% of the increase in spending is going to health and insurance; consumption of the rest is growing by only 0.3%.
Retailers are paying the price for Obamacare. This is one reason that in past sketches we have debunked the weather excuse from the get go.
Robert Craven
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