July 30, 2020
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 declined 28.2% in the second quarter. Given that final sales declined by 29.3% in that quarter, it is clear that the trade component added 1.1% to GDP growth in that quarter.
Following the 5.0% GDP drop in the first quarter, GDP plunged by 32.9% in the second quarter. However, we expect third quarter GDP to increase by 32.0%.