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Showing Original Post only (View all)Krugman: 85% of consumer spending in America is on American-produced goods and services [View all]
Not So Globalhttp://krugman.blogs.nytimes.com/2012/01/16/not-so-global/
Barry Ritholtz sends us to a San Francisco Fed paper from last summer that makes a point on which many people seem confused: despite globalization and all that, the bulk of a consumer dollar spent in America falls on American-produced goods and services.
The reason this matters or at least one reason it matters is for discussion of austerity, stimulus, and all that. I often get comments along the lines of Well, maybe stimulus worked back in the old days, but now it just means spending more on stuff from China. In reality, thats nowhere near true.
Why? For one thing, most consumer spending is on services, few of which are really tradable. For another, even if the thing you buy in WalMart says Made in China, the price includes a lot of US value-added in the form of transportation and retailing costs.
So were still a country where about 85 cents of your consumer dollar is spent at home, one way or another. And this means, among other things, that the rules of macroeconomics havent changed nearly as much as people imagine.
Canadians spend about 75% on domestic goods and services, Germans about 70%, Swedes less than 60%. Less than 2% of consumer spending here is on Chinese-produced goods.
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Krugman: 85% of consumer spending in America is on American-produced goods and services [View all]
pampango
Jan 2012
OP
I assume the graph was done that way to better show the rise in the line for Chinese goods.
DCBob
Jan 2012
#11
Services includes a lot of things that are fixed expenses, housing, insurance, vehicle maintenance..
Fumesucker
Jan 2012
#7
When food and energy are excluded, 88% of expenditure is 'Made in USA'
muriel_volestrangler
Jan 2012
#12