First Quarter 2014: The Obama Economy’s “worst quarter” in five years thanks, in part, to Obamacare

Obama Economy

Quelle surprise! More bad news for President Obama.

The New York Times lede on this story is unforgiving:

The beginning of the year was not just bad for the United States economy: It was, on paper at least, the worst quarter since the last recession ended five years ago.

Revised 2014 first-quarter estimates of the gross domestic product by the Department of Commerce reveal the economy actually contracted at a 2.9 percent annual rate, down from a previous estimate of negative 1 percent growth and the initial estimate of 0.1 percent growth. This is the worst contraction since the economy shrank at a rate of 5.9 percent during the first quarter of 2009.

This contraction puzzled New York Times’s Neil Irwin, who wrote:

What makes the sharply negative number all the more stunning is that it didn’t feel like an economic contraction at all in the first quarter. Employers kept adding jobs. Many measures of business activity and consumer confidence were stable. And forecasters are expecting a healthy pop of growth in the second quarter, which ends next week.

An earlier estimate showed that health care spending (think Obamacare) contributed 1 percentage point to economic growth, but that wasn’t the case. Health care spending actually knocked 0.16 of a percentage point off the growth rate. Shocking no one, Irwin surmises:

The health care spending data in G.D.P. is a measure of how much President Obama’s health reform law is reshaping health care spending patterns, and it is now showing opposite results from those reported two months ago, when the first-quarter data was initially released.

Irwin reveals economists expected a contraction in the revised data, but they weren’t expecting such a significant shift downward. As Irwin put it, economists wanted the bad news to be “less bad.”

The news really isn’t getting better for President Obama. In response, RNC Chairman Reince Priebus issued the following statement:

“It’s clear the White House doesn’t know which way is up, just two months ago bragging that ObamaCare was helping the economy and now we’re seeing the worst economic report since the low point of the recession in 2009. The Republican House has sent Harry Reid and Democrats in the Senate dozens of bills to help jump start our economy and it’s time they stop standing in the way.”

And Barack Obama was all like…

 


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