Tuesday, 22 of January of 2019

Economics. Explained.  

Final Sales to Domestic Purchasers

December 21, 2018

It is important to remember that final sales is a measure of how many domestically produced goods are sold each quarter.  But we also sell goods overseas — our exports.   And we purchase goods from other countries — our imports.

In the never-ending process of analyzing the GDP data, there is yet another series called “final sales to domestic purchasers” which measures how much U.S. residents are actually spending.  It starts with final sales, but then subtracts exports (which represents how much foreigners are buying from the U.S.) and adds imports (which represents how much U.S. residents are spending on imports).  The end result is a measure of sales by domestic purchasers.

Final sales to domestic purchasers which excludes both the change in inventories and trade rose by 2.9% in the third quarter after having risen 4.0% in the second quarter.  Over the past year this series has risen at a 3.3% pace.  The deficit for net exports widened by $108.7 billion in the third quarter after having narrowed by $61.4 billion in the second quarter which means that the trade component subtracted 1.9% from GDP growth in the third quarter after having added 1.4% to GDP growth in the second quarter.  In the third quarter exports declined 4.9% while imports surged by 9.3%.

Going forward the stock market should rebound which will boost net worth.  The consumer is confident.  Interest rates are rising slowly but remain low.  The economy is creating a reasonable number  of new jobs.  The unemployment rate continues to decline slowly.  Income is rising.  Furthermore, corporations are making steady profits.  Finally, the economy should continue to receive some  stimulus from the individual and corporate income tax cuts plus some repatriation of overseas earnings.

The economy should expand at a 3.1% rate in 2018 and 2.8% in 2019.

Stephen Slifer


Charleston, SC

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