The market has been roaring over the past few months, but there are still major macroeconomic issues looming in the background. I consider myself a value investor, but I’m also very cognizant of how big macro issues can undermine value. We saw this in the Great Depression and with the recent financial crisis, and there are still numerous currents that could undermine value in the next few years.
The eurozone crisis, Japan’s currency interventions, and China’s real estate bubble are just a few of the macro issues that people should pay attention to. In the next 12 – 24 months, however, I believe that the Affordable Care Act (frequently called “Obamacare”) will be the greatest obstacle to economic growth in the United States.
There are several issues in the ACA that could hamper economic growth moving forward. For this series, I am focusing on five of them:
(3) Restrictions on employment,
(4) Higher costs associated with low-skill workers, and
(5) Restrictions on high-deductible insurance plans
In my first article, I looked at some of the direct taxes implemented by the ACA and how historical tax increases had harmed private domestic investment and consumer spending. In my second article, I examined how the ACA’s subsidies could create a cost-spiral, and lead to large stealth taxes.
For this article, I want to look at the employment related impacts of ACA. My view is that some provisions of the law will not only increase prices of certain goods and services, but that it’s also likely that the restraints on trade will result in many lower- and lower-middle income Americans having less disposable income. This could potentially harm consumer spending, which could be a drag on GDP growth.