January Spending Was Driven by Health Care

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Monday, 03 March 2014 22:03

There was a larger than normal jump in spending on consumer services reported for January. The Reuters article attributed this to weather driven increases in spending on heating.

Actually the biggest rise in spending on services in January was for health care. The Commerce Department showed the annual rate of spending increased by $30.5 billion in January. This amounted to a 1.6 percent increase in spending compared with December. This is an extraordinary rate of increase, especially considering the slow growth in health care costs over the last five years.

Most likely the increase was due to one time factors associated with the Affordable Care Act. It will matter hugely to the success of the program and the budget and the economy if this increase turns out not to be a one time increase.