Jan 4. Longer term thoughts health care and demographics

Some longer term thoughts on the US economy:

1) In 2013 US health care spending increased 3.6% to reach $2.9 trillion, or $9,255 per person, the fifth consecutive year of slow growth in the range of 3.6 percent and 4.1 percent. The share of the economy devoted to health spending has remained at 17.4 percent since 2009 as health spending and the Gross Domestic Product increased at similar rates for 2010 – 2013.

http://www.cms.gov/Research-Statistics-Data-and-Systems/Statistics-Trends-and-Reports/NationalHealthExpendData/downloads/highlights.pdf


The White House web site says that growth in health care spending is slowing.  That’s probably a very positive outcome of ObamaCare; as deductibles have gone up, a larger percent of the population is saddled by very large out of pocket costs and therefore isn’t spending as much.  From the report:
“The exceptionally slow growth in health care spending in recent years has spurred a lively debate among economists and others about its causes, with some arguing that the recent slow growth primarily reflects the 2007-2009 recession and its aftermath and others arguing that structural changes in the health care system are playing a leading role.”  In any case, it seems that slowing growth in the medical sector will negatively impact GDP.
2) http://www.whitehouse.gov/blog/2014/12/03/historically-slow-growth-health-spending-continued-2013-and-underlying-slow-cost-gro
 

2) Global demographics.  Japan is imploding, with more deaths than births.  In the US: “And while the United States currently experiences more births than deaths, the estimated total fertility rate—the number of children a woman will have in her lifetime, on average—remains at just 1.9 births per woman. That is slightly below the replacement level of 2.1 births per woman, a rate last seen in 2007, before the recession. “

‘Mosher said European nations are experiencing economic stagnation as their working populations age: “In Germany they’re converting maternity wards to geriatric clinics because there are no women coming into the hospitals to have babies.” ‘

http://www.worldmag.com/2014/12/another_year_of_tepid_u_s_population_growth

3) A bright spot for the US economy has been auto sales, where the annual pace has surged up to a rate of 17.1 million.  That’s around the level that prevailed from 2000 to 2005.  Granted the population has grown, but miles driven has been falling.  Can lower gas prices give this series another boost?  Maybe so… There are a lot of new car leases at around $200 month, and the gas price drop has likely put $50 month into a lot of drivers’ pockets.  However, to expect growth to increase much from this level seems to be a stretch. 

Posted on January 4, 2015 at 7:16 am by alexmanzara · Permalink
In: Eurodollar Options

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