It’s reported that consumer spending has increased since the 1960’s from 61% to 71% of the the gross domestic product. However, most of the increment is health care costs.
Medical payments now account for about 16 percent of total consumer spending, more than food and clothing combined, which make up about 11 percent, or housing, which accounts for about 15 percent. The rising cost of health care means it will consume an even bigger share of the world’s largest economy as the population ages, according to economists like Jay Feldman.
“At the consumer level, it may squeeze out other discretionary spending,” Feldman, an economist at Credit Suisse in New York, said in an e-mail. “At the government level, rising Medicare and Medicaid spending will inevitably put pressure on other government spending priorities. At the business level, it could curtail investment, or more likely, suppress wages.”
Medicynical Note: Increased discretionary consumer spending as a proportion of GDP (over the last 50 years in the U.S.) is an oxymoron.