Exports are where overseas consumers purchase our production, i.e., They buy what we make.
What were the specifics of the GDP data regarding import/export?
-Real imports of goods and services decreased 15.1%
-Real exports of goods and services decreased 7.0%
So in Q2, both consumption by us of overseas goods and services and by them of US made goods and serivces declined significantly.
The Differential between imports and exports — who dropped fastest — was the key to this quarter’s GDP data.
According to Bloomberg, Decreasing Exports subtracted 0.76% from GDP. At the same time, falling Imports added 2.14%. Net contribution of the fact that Imports are free falling twice as fast as Exports are = 1.38%.
If they were both falling at the same rate — if Europe and Asia’s consumers were hurting as much as ours – GDP would have been -2.38%.
If it seems weird to you that the ratio of domestic and overseas shrinking economies and their reduced consumption somehow turned into a positive GDP contributor, well, welcome to the wonderful world of government statistics.
Originally published at The Big Picture and reproduced here with the author’s permission.