GDP versus final sales

Bob Barbera tells me there is information in the data on "final sales to domestic purchasers." Final sales to domestic purchasers is GDP minus net exports and inventory investment. It measures demand for goods and services from US households, businesses and government, regardless of whether those goods and services are imported or domestically produced. GDP, by contrast, measures demand for US-produced goods and services, regardless of whether that demand is from foreigners or US residents. Here's a graph of quarterly growth rates of real GDP and final sales:

The GDP numbers show a weakening of growth, from 5% in 2009Q4 to 3.7% in 2010Q1 to 2.4% in 2010Q2 (the latter number likely to be revised further downward). But the final sales figures show the opposite: growth in demand accelerated from 0.2% in 2009Q4 to 1.3% in 2010Q1 to 4.1% in 2010Q2.

What does this mean? It means that the slowdown in GDP growth is due to a dramatic rise in imports - the BEA's report on 2010Q2 GDP says that import growth reduced GDP growth by 4 percent in the quarter. People - most importantly, businesses - are buying, but they're buying imported goods rather than domestically-produced goods. The result is little feedback to domestic employment. If I had to guess, I would guess that the problem is that weakness in the housing sector means lower than normal demand in sectors heavy on domestic production. Business investment in equipment and software has been leading growth the last few quarters, and much of this stuff is probably imported.