A common refrain I see in some conservative circles is that employment gains or GDP are juiced by \u201cfake\u201d activity, of which government spending is one and health care services are another (health care services are allegedly \u201cfake\u201d by virtue of being mostly government funded \u2013 at least that\u2019s the argument I see a lot).<\/p>\n
So, here\u2019re two pictures of GDP accounting for these arguments, and two pictures of employment (aside: if you think that heart operation you got had zero utility for you, these are the graphs for you!):<\/p>\n
Figure 1:<\/strong> GDP growth q\/q SAAR (black line), contribution from health care consumption (tan bar), from government consumption (blue bar), from rest-of-GDP (green bar). Source: BEA 2024Q2 release\/annual update, and author\u2019s calculations.<\/em><\/p>\n \u00a0<\/p>\n Figure 2:<\/strong> GDP growth q\/q SAAR (black line), GDPNow 10\/1 estimate (chartreuse box), GDP growth ex government consumption (teal), growth ex-government consumption and health care consumption (red), Source: BEA 2024Q2 release\/annual update, and author\u2019s calculations.<\/em><\/p>\n Hence, growth is still pretty positive since 2022Q1, regardless of whether government consumption, or health care consumption, is excluded.<\/p>\n What about employment? As EJ Antoni<\/a> has noted, over half of y\/y employment growth is accounted for by government and health care.<\/p>\n Figure 3:<\/strong> 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\u2019s calculations.<\/em><\/p>\n Dr. Antoni notes:<\/p>\n More than half of last 12-months of job growth has come from gov\u2019t and the gov\u2019t-dominated healthcare sector; it\u2019s all tax-payer funded, and it\u2019s not at all sustainable\u00a0<\/span><\/p>\n<\/blockquote>\n I\u2019ll just point out that context is important. In addition to an aging population (ever have to deal with your parents\u2019 health care and housing issues?), there was a big hit to the level of health care and social assistance employment during the pandemic, as shown in Figure 4.<\/p>\n![\"\"](\"https:\/\/econbrowser.com\/wp-content\/uploads\/2024\/10\/gdpcontribpix.png\")
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