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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

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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

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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.

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