January 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  rose 1.6% in the fourth quarter after having risen 2.2% in the third quarter.  In the fourth  quarter the deficit for net exports narrowed by $88.1 billion from $980,7 billion to $902 billion.   In that quarter exports rose 1.4% while imports plunged by 8.7%.  Given that final sales to domestic purchasers rose 1.6% while final sales rose 3.2%,  it is clear that the trade component added 1.6% to GDP growth in that quarter.  Over the past year this series has risen at a 2.3% pace

Going forward the stock market should continue to climb which will boost net worth.  The consumer is confident.  Short-term Interest rates have declined 0.75% since June.  Mortgage rates have falleln 1.2% to 3.7%.  The economy is creating 170 new jobs monthly.  The unemployment rate is steady at a 50-year low.  Income is rising.  Furthermore, corporations are making steady profits.

The economy should expand at a  2.4% pace in  2020 after rising 2.3% last year.

Stephen Slifer


Charleston, SC