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PPACA adds uncertainty to economic data

(AP photo/Jon Elswick)
(AP photo/Jon Elswick)

Obamacare implementation is affecting the latest federal household spending numbers.

The staff of the Bureau of Economic Analysis has struggled to estimate how much PPACA Medicaid expansion and the birth of the exchanges changed health care spending.

BEA analysts assumed in their latest monthly household income and spending report that Medicaid expansion powered consumer spending by about $19 billion in January.

The new PPACA exchange plan tax credit and increases in other federal tax credit programs might have increased spending in January, analysts said.

If those assumptions are correct, total spending on services might have increased 0.8 percent in January. That would be the biggest increase in personal spending on services the BEA has recorded since October 2001.

But the analysts noted that they have no data on how PPACA programs specifically influenced January spending. The analysts had to use information about how PPACA and Medicaid are supposed to work to develop their PPACA impact assumptions.

If they’re correct, total U.S. household spending may have increased 0.4 percent in January, up from 0.1 percent in December.

Household income increased 0.2 percent.

Spending on automobiles and other durable goods fell 0.2 percent, and spending on non-durable goods, which include gasoline, fell 0.7 percent.

Economists and business planners watch the BEA household income and spending figures closely, because household spending accounts for about 70 percent of U.S. gross domestic product.

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