Wednesday, 15 of August of 2018

Economics. Explained.  

Final Sales to Domestic Purchasers

July 30, 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 3.9% in the second quarter after having risen 1.9% in the first quarter.  Over the past year this series has risen at a 2.9% pace.  The deficit for net exports narrowed by $52.5 billion in the second quarter which means that the trade component added 1.2% to GDP growth in the second quarter as exports surged by 9.3% while imports climbed by 0.5%.

Going forward the positive factors are that the stock market should continue its uptrend later this year.  The consumer is confident.  Consumers have record net worth.  Interest rates remain low.  The economy is creating a reasonable number  of new jobs.  The unemployment rate continues to decline slowly,  oil prices remain relatively low, the housing sector is expanding nicely, and income is rising.  Furthermore, corporations are making steady profits, have a ton of cash, and corporate interest rates remain low.  Finally, the economy should 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 after having risen 2.5% last year.

Stephen Slifer

NumberNomics

Charleston, SC


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