Novembere 25, 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 29.4% in the third quarter after having declined 27.1% in the second quarter. Given that final sales rose by 25.5% in that quarter, it is clear that the trade component subtracted 3.9% from GDP growth in that quarter.
After having plunged by 31.4% in the second quarter and rebounded by 33.1% in the third quarter, we expect an additional 10.0% growth in Q4, and 5.5% growth in 2021.