In the wake of a supposedly strong third quarter GDP announcement, I just want to note a few things. One is that a lot of that supposed growth is in one-time adjustments to inventory and other matters. The second is that inflation appears muted in part because the government continues to ignore health care inflation. Health care is over 17% of the economy. The third is that wage growth is slow in the private sector, but boy oh boy, those hard(ly) working government employees are seeing big wage increases, and real incomes continue to be down. The fourth is that the saving rate is extremely low, suggesting consumer spending is stable only because people are using savings. The fifth is that no matter what happens with inflation, interest rates are going to stay high. The US has hit the wall on issuing debt and buyers of that debt won’t purchase unless rates are high, because everyone is now wondering when, if ever, we will get our financial house in order. Sixth, inflation is also not going to subside, particularly if we see more private labor cost increases like that apparently being given to auto workers. And no matter how big those wage increases are, when inflation keeps rising, real income doesn’t grow much, if at all. And the wage increases flow through in the prices of goods and services, thereby keeping inflation up. So the Bidementia administration can phony-up the statistics all they want, the reality in terms of people’s personal financial situation and quality of life is not pretty.
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About this Blog
The Healthy Skeptic is a website about the health care system, and is written by Kevin Roche, who has many years of experience working in the health industry. Mr. Roche is available to assist health care companies through consulting arrangements through Roche Consulting, LLC and may be reached at [email protected].
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