A common objection I see in some conservative circles is that employment gains or GDP are increased by “fake” work, where government spending is one and health care services are another (health care services are allegedly “fake” because they are mostly government funded – at least that’s the argument I see a lot ).
So, here are two graphs of GDP calculations for these arguments, and two graphs of work (exception: if you think the heart surgery you got was beneficial to you, these are the graphs for you!):
Figure 1: GDP growth q/q SAAR (black line), contribution from healthcare spending (tan bar), from government spending (blue bar), from rest-of-GDP (green bar). Source: BEA 2024Q2 release/annual update, and author’s calculations.
Figure 2: GDP growth q/q SAAR (black line), GDPNow 10/1 ratio (chartreuse box), GDP growth over government spending (teal), government spending growth and health care spending (red ), Source: BEA 2024Q2 release/annual update, and author’s calculations.
Therefore, growth is still very positive from 2022Q1, even if government spending, or healthcare spending, is not included.
What about work? As EJ Antoni noted, more than half of the year-over-year job growth is accounted for by government and health care.
Figure 3: Nonfarm payroll (NFP) employment growth y/y (black line), contribution from health care and social services (tan bar), from government (blue bar), from rest-of-NFP (green bar). Source: BLS and author’s calculations.
Dr. Antoni comments:
More than half of the 12-month job growth came from the government and state-run health care sector; it’s all funded by taxpayers, and it’s not sustainable at all
I’ll just point out that context is important. In addition to the aging population (who have to deal with your parents’ health and housing problems?), there has been a large discrepancy in the level of health and social care employment during the pandemic, as shown in Figure 4.
Figure 4: Health care and social assistance employment (blue), and the stochastic (log) trend estimated for the period 2014-19 (red), all in 000s, Plotted on a log scale. The NBER has defined recession days as shaded in gray. Source: BLS, NBER, and author’s statistics.
It seems to me that we have work to do in terms of health care and social services employment, so maybe it will continue for some time?
Source link