The Real Obamacare Nightmare is Just Beginning
April 23rd, 2014
by Gary Halbert
of Halbert Wealth Management
IN THIS ISSUE:
1. Finally, Some Bright Spots in the Economy
2. The Real Obamacare Nightmare is Just Beginning
3. HWM ALPHA ADVANTAGE Webinar Recording
4. Some Parting Thoughts About Easter
Last Thursday, the Obama administration said that a total of eight million Americans had signed up for Obamacare. In a hastily called press event, President Obama spiked the football, took a victory lap around the White House and declared the healthcare law a smashing success – although they still haven’t told us how many enrollees have actually paid a premium, or how many were simply replacing their policies that were canceled due to Obamacare.
In any event, the millions of Americans who have purchased health insurance on the government exchanges are in for another round of shocks as they begin to try to actually use their new healthcare insurance. New nightmares are being reported almost daily and we’re only getting started.
The problems that will create the next Obamacare headlines will come in three main areas: 1) lack of access to doctors, 2) failures of the system to verify coverage and pay claims, and 3) the incredibly high deductibles and copays on the exchange insurance policies. I have reprinted an excellent article on this growing nightmare below.
Yet before we go there, let’s take a look at a few recent economic reports that are actually encouraging. Also, our webinar last Wednesday on the HWM Alpha Advantage investment opportunity was one of the most highly attended web events we have ever done. The presentation was excellent and the questions from attendees were spot-on. To view the webinar, CLICK HERE.
Finally, Some Bright Spots in the Economy
After a very cold winter with lots of confusing economic data, some important recent indicators suggest that the economy may be coming out of hibernation at last. We’ll take a look at these reports below. After a strong showing in the 3Q of last year, with GDP jumping a better than expected 4.1% (annual rate), the economy disappointed in the 4Q with growth of only 2.6%.
In addition, we had a couple of lousy jobs reports late last year. In December, for instance, the economy added just 84,000 new jobs, less than half of what it had been averaging the previous two years. Second, consumer confidence which had risen for much of 2013 declined rather sharply in the final months of last year.
Then came other disappointing readings earlier this year including poor auto sales in January and the Institute for Supply Management’s disappointing report on the service sector in February, which showed the weakest expansion of activity in four years – just to name a few of the numerous disappointments late last year and early this year.
One after one, the disappointing economic reports were blamed on the bad weather much of the country experienced in January and February. But other forecasters worried that the slump might be more ominous and that the recovery might be slipping back into a new recession. Many said it was wrong to place the blame on the bad weather.
However, some recent economic reports suggest that the blame-the-weather crowd may have been right to dismiss a severe winter full of worrying data. Here are three reasons why it appears that the economy may have shaken off the cold-weather blues.
1. Retail Sales. The Commerce Department reported last week that retail sales increased 1.1% in March, above the 0.9% increase economists were expecting. The increase was also the largest month-to-month rise since September 2012, suggesting that consumers had been waiting for warmer weather to spend more.
2. New Car Sales. US GDP is composed primarily of consumer spending. So when shoppers are spending on big-ticket items like cars, this is a good sign for economic output and, ultimately, job growth. That’s why economists were heartened earlier this month when automakers announced that they had sold, at an annualized rate, 16.4 million new cars in March – the highest number since June 2006.
Again, we see the effects of the weather. The jump was much higher than analysts expected and, according to an analysis by Gary Thayer, chief macro strategist for Wells Fargo Advisors, “Some of the car and truck sales were probably pent-up demand from the temporary dip during the past few months.”
In other words, don’t expect increases in sales of the same magnitude each month, but rather take the most recent jump as making up for a weak winter. Still, the recovery in auto sales is definitely encouraging.
3. Jobless Claims. For most Americans, economic data is meaningful only when it touches their lives. Is it easy or hard for me to get a job, start a business, and grow my income? This is why the press pays so much attention to monthly jobless data, which can, unfortunately, be very noisy and unreliable in any given month.
As a supplement, economists track the number of Americans applying for jobless benefits for the first time as a gauge of the labor market. If this number falls, it’s a good sign that the labor market is getting healthier. Last week, the Labor Department announced that this number dipped to 304,000, its lowest level since May 2007. The four-week average also fell to 316,250, below economists’ expectations, and to a level that is consistent with previous economic expansions.
As you can see, despite the noise in the monthly jobs numbers, jobless claims have been falling for years now, even without the very encouraging reading of just 304,000 last week.
It’s easy to make fun of economists and their predictions. After all, anybody predicting the future is going to be wrong more often than they are right. But at least at this point, it looks like blaming poor economic data on unseasonably cold weather may have been correct.
This remains to be seen, of course, and a lot could still change. Consumer confidence continues to be the key. As always, all we can do is wait for the next curves in the road. For now at least, it does not look like the economy is slipping back into a recession.
Consumer confidence, as measured by the UMich Consumer Sentiment Index, has risen sharply since the low in late 2012, which was roughly equal to the low in 2008 during the Great Recession. But it is also bumping up against a lot of overhead resistance from a technical perspective.
Since consumer spending accounts for apprx. 70% of GDP, it will be very important to see what happens next. There is so much uncertainty in the world today it is simply impossible to know what lies ahead. It will be very interesting to see if consumer confidence breaks out to the next level on the upside, or if there are new setbacks to come.
The Real Obamacare Nightmare is Just Beginning
I have avoided writing much about Obamacare since the president was re-elected in late 2012. Since the disastrous rollout of the Affordable Care Act last October, the country has been fixated on whether enough Americans (and the right age mix) would enroll in Obamacare. Last Thursday, the Obama administration said that a total of eight million Americans had signed up.
In a hastily