You’ve probably heard over and over again that consumer spending is around three-fourths of gross domestic product (GDP). The images that immediately come to mind are car lots, shopping malls and online purchases.
Yet consumer spending is only 57 percent of GDP without health care. That’s right, a big chunk of “consumer spending” is really money we spend on health and medical care.
Look at this chart created by economist Ed Yardeni.
Since the mid-1960s, total personal consumption expendures rose from 61 percent of GDP to a record 71 percent of GDP. “Yet the entire increase was attributable to health-care spending,” Yardeni says. “Excluding health care, consumer spending currently accounts for only 57 percent of GDP, the same as in the mid-1960s”
In other words, healthcare is increasingly the big driver in consumer finances.