The U.S. economy didn’t boom in Q3, health insurance did
As members of the Trump administration took victory laps following the much stronger-than-expected third-quarter GDP report, market commentators were quick to point out the dismal reality behind the headline number.
Just before Christmas, the Bureau of Economic Analysis reported that U.S. GDP expanded at a 4.3% annualized rate in Q3, accelerating from the prior quarter and handily beating economists’ expectations.
At first glance, the report appeared to confirm a resilient consumer. Consumer spending rose 3.5% in the third quarter, up from 2.5% in Q2, making it the single largest contributor to overall growth.
However, a closer look tells a very different story.
According to an analysis highlighted by market commentator Zerohedge, by far the largest contributor to personal consumption growth came from health insurance.
That raised fresh concerns about the role of rising insurance costs in propping up GDP figures.
Health insurance spending is a long-running problem for American households, and increases in this category are less a sign of economic strength than a reflection of persistent inflation and accounting effects.
That distinction matters. As Creative Planning’s Charlie Bilello has noted, the average U.S. family’s health insurance premium has increased 6.1% per year since 1999, resulting in a staggering 365% cumulative increase over that period.
Average US family health insurance premium...
undefined Charlie Bilello (@charliebilello) October 23, 2025
1999: $6k
2003: $9k
2007: $12k
2011: $15k
2015: $18k
2019: $21k
2023: $24k
2025: $27k
That's a 365% increase since 1999 (6.1% per year).
(Note: US CPI inflation has increased 2.6%/year) pic.twitter.com/xgehY2a5xo
Health insurance premiums have risen at more than double the pace of headline CPI, placing sustained pressure on household budgets.
Real GDP growth looks far weaker beneath the surface
Even setting aside the surge in health insurance spending, the GDP report raises additional red flags.
Economist David Rosenberg compared the release to recent inflation data that some commentators criticized as “totally inexcusable,” particularly because of methodological distortions tied to housing and government activity.
“Strip out government spending, sliding imports, and the sharp drawdown in the personal savings rate used to support consumption,” Rosenberg wrote, “and guess what? Real GDP growth was just +0.8% SAAR in Q3 — nowhere near +4.3%.”
In short, while the headline GDP number suggests an economy firing on all cylinders, the underlying composition paints a far more fragile picture — one increasingly reliant on accounting effects, rising costs, and consumers dipping into savings rather than broad-based, sustainable growth.
This disconnect helps explain why so many Americans say they feel worse off despite the economy’s apparent strength. Many investors describe the phenomenon as a slow erosion of purchasing power over time.
Billionaire investor Ron Baron has argued that American workers effectively need to double their income over roughly 15 years just to stay even, a stark illustration of how inflation steadily undermines real earnings and living standards.