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Buy American? An Update.
Old 08-13-2011, 08:29 PM   #1
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Buy American? An Update.

FRBSF Economic Letter: The U.S. Content of “Made in China” (2011-25, 8/8/2011)

What do you think?
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Old 08-14-2011, 11:41 AM   #2
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Certainly not what I expected (have not dug into the methodology though).

Quote:
Conclusion

personal consumption expenditures (PCE)

Figure 2 shows the share of U.S. PCE based on where goods were produced, taking into account intermediate goods production, and the domestic and foreign content of imports. Of the 2.7% of U.S. consumer purchases going to goods labeled “Made in China,” only 1.2% actually represents China-produced content. If we take into account imported intermediate goods, about 13.9% of U.S. consumer spending is attributable to imports, including 1.9% imported from China.
But, I guess if you think about the personal budget, a lot is housing, food, property tax, insurance, utilities. So maybe all those "made in China" labels don't add to as much as we think?

I recall reading that Apple makes a lot more money on an iPod than China does.

Thanks for posting, very interesting.

-ERD50
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Old 08-14-2011, 04:58 PM   #3
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I think that is really quite a remarkable statistic that China accounts for only 2.7% of all consumer spending. I'd be interested in seeing some other research on the subject.

I was watching a CNBC special on supermarkets, which talked a lot about Whole Foods and Walmart. (obviously two ends of the supermarket spectrum.) I was marveling at how efficient both companies were.

All the rhetoric about how the US doesn't make anything anymore and we are D00Med, ignores our real strengths in agriculture, logistics, merchandising, and marketing. Even Europeans who walk into a good American supermarket for the first time, are often shocked by the wide variety of products and generally low prices we have. Folks from the rest of the world are even more awed.

I was looking at pictures of all the food aid piled up in Mogadishu, and than seeing all the horrible famine pictures, and I reflected that simply making a lot of stuff isn't enough. You also have to get the stuff to the people in a timely manner, and US companies are awfully good at this which is a valuable service.
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