How Much Does Health Care Contribute to GDP? – MishTalk

Health care was nearly half of PCE services in Q3. Here’s a breakdown of services.

Real PCE Services in Billions of Dollars

Total: 10,942

Health Care: 2,963

Housing and Utilities: 2,704

Recreation: 632

Transportation: 520

Financial and Services: 1,181

Food and Accommodation: 1,090

Other: 1,479

Health care is now the single largest PCE component. It passed Housing and Utilities in January of 2023.

For contribution to GDP, we need to look at the change in real spending.

Real PCE Services Change in Billions of Dollars

Health care is no consistently the fastest growing segment of PCE services.

2025 Q3 Change in Services from 2025 Q2

Total: 100

Health Care: 48

Housing and Utilities: 2

Recreation: 10

Transportation: 4

Financial and Services:7

Food and Accommodation: 3

Other: 25

Health care was nearly half of the increase in PCE spending in the third quarter. That means it was nearly half of the services contribution to GDP.

Real PCE Services Health Care Percentage Point Contribution

In 2025 Q3 Heath Care was 48.2 percent of PCE Services spending. It provided 0.84 percentage points to GDP.

These numbers will soar in 2026. I expect the nominal cost of health care to surge by 10 percent or more next year.

As measured by GDP, the economy is humming. As measured by many other things, it’s not.

Let’s discuss the statistical discrepancy.

Let’s discuss 2026 health care premiums and what they mean to the Fed’s preferred measure of inflation.