How Non-profit Organizations Saved Q1 GDP

Jon Economy

For years the BEA traditionally used healthcare (i.e. Obamacare) as the “plug” variable to boost GDP at time when it, well, needed boosting.
However, now that Trump is in control, and Obamacare is on its way out one way or another, this will no longer work especially since healthcare spending is likely to significantly moderate in coming years as the GDP boosting mandatory tax that is Obamacare is repealed in some fashion over the coming quarters. And yet, in today’s GDP report personal spending was reported to nearly double, with Personal Consumption Expenditures jumping from only $9.7 BN annualized as per the first estimate, to $18.6 BN in the just released second revision, a nearly 100% increase.
What drove this? The answer was interesting as a new “plug” category appears to have emerged: non profit organizations. As the chart below shows, while healthcare was revised sharply lower in the second revision, this was more than offset by a $11.9 billion annualized increase in expenditures of “nonprofit institutions serving households.”

This post was published at Zero Hedge on May 26, 2017.