Second-Quarter National Economic Activity And Third-Quarter Outlook - Second-Quarter 1988

The real gross national product (GNP) advanced at a annual rate of 3.1 % during the second quarter, following a revised 3.4% increase in the first quarter (see table 1). Export growth continues to play an important role in the rising output. Combined with the decline in imports, it resulted in a noticeably improved trade position. Imports of consumer goods, including automobiles and food, fell while exports rose. Imported cars have been losing ground to domestic cars. The foreign car share of the U.S. market fell from 36% in October 1987, to 29% in May 1988. Business spending for new plant and equipment contributed strongly to the GNP increase. Equipment purchases, particularly of computers, rose at a 14.8% annual rate, following a large first-quarter gain. Purchases of structures rose 11.8%. The other key component of business spending, change in business inventories, declined from the first quarter. Inventory buildup in late 1987 had been considered excessive.