THE U.S. ECONOMY’S REARVIEW mirror darkened last week. Real growth of gross domestic product in the second quarter, previously reported at an annual rate of 2.4%, will likely be halved to just 1.2% when the next estimate is released Aug. 27

The main reason: Imports soared in the second quarter by much more than originally anticipated, led by that well-known powerhouse, China.

To say this is not to imply, as some have, that imports are a drag on American prosperity. But since the “D” in GDP stands for “domestic,” we are tracking only what is produced in the U.S.

 Imports, by definition, are produced abroad. And there are no data that directly track domestic production. So one strategy used by the Bureau of Economic Analysis, the Commerce Department agency in charge of these numbers, is to subtract imports from figures on domestic sales in order to get at domestic production indirectly.

What in effect happened, then, is that a large portion of sold products that were thought to have been produced here were actually imported. Hence the hit to GDP growth (Source: Barrons Online).