Monday, August 15th, 2011
Stephan: As the result of a dinner conversation for about three months I have been looking for some research on exactly how much of consumer spending goes to 'made in China' products. I finally found a trustworthy report, and it contains some major surprises. Click through to see the graphs the report references.
Galina Hale is a senior economist in the Economic Research Department of the Federal Reserve Bank of San Francisco.
Bart Hobijn is a senior research advisor in the Economic Research Department of the Federal Reserve Bank of San Francisco
References:
Bureau of Labor Statistics. 2010. 'Inter-industry relationships (Input/Output matrix).'
U.S. Census Bureau. 2011. 'U.S. International Trade Data.'
Xing, Yuqing, and Neal Detert. 2010. 'How the iPhone Widens the United States Trade Deficit with the People's Republic of China.' Asian Development Bank Institute Working Paper 257.
Goods and services from China accounted for only 2.7% of U.S. personal consumption expenditures in 2010, of which less than half reflected the actual costs of Chinese imports. The rest went to U.S. businesses and workers transporting, selling, and marketing goods carrying the ‘Made in China’ label. Although the fraction is higher when the imported content of goods made in the United States is considered, Chinese imports still make up only a small share of total U.S. consumer spending. This suggests that Chinese inflation will have little direct effect on U.S. consumer prices.
The United States is running a record trade deficit with China. This is no surprise, given the wide array of items in stores labeled ‘Made in China.
