‘Made in China’ Less than 3% of US PCE

August 17, 2011

This article is included in these additional categories:

Asia-Pacific | B2B | Brand Metrics | CPG & FMCG | Financial Services | Food & Restaurants | Radio | Retail & E-Commerce | Uncategorized

fed-import-content-pce-aug-2011.JPGGoods and services from China accounted for only 2.7% of US. personal consumption expenditures in 2010, of which less than half reflected the actual costs of Chinese imports, according to an August 2011 economic letter from the Federal Reserve Bank of San Francisco. The rest went to U.S. businesses and workers transporting, selling, and marketing goods carrying the “Made in China” label.

Federal Reserve data shows the vast majority of goods and services sold in the US is produced here. In 2010, imports were about 16% of U.S. GDP. Imports from China amounted to 2.5% of GDP, about one-quarter of the 11.5% foreign share.. A total of 88.5% of US consumer spending is on items made in the US. This is largely because services, which make up about two-thirds of spending, are mainly produced locally.

Chinese Imports Mostly Durables

Federal Reserve analysis shows the market share of foreign goods is highest in durables, which include cars and electronics. Two-thirds of US durables consumption goes for goods labeled “Made in the USA,” while the other third goes for goods made abroad. Chinese imported goods consist mainly of furniture and household equipment; other durables; and clothing and shoes. In the clothing and shoes category, 35.6% of US consumer purchases in 2010 was items made in China.

Total Chinese Import Share of PCE is 1.9%

fed-import-content-pce-historic-aug-2011.JPGThe total share of PCE that goes for goods and services imported from China is 1.9%. This is 0.7 percentage point more than the share of Chinese-produced final goods and services in PCE, mainly due to the use of intermediate goods imported from China in the U.S. production of services.

The import content of PCE has been relatively constant at between 11.7% and 14.2% since 2000, according to Federal Reserve analysis of government figures. Import content peaked in 2008 at 14.2%, which was probably due to the spike in oil prices at the time. The share of imports in PCE is slightly lower than in GDP as a whole because the import content of investment goods turns out to be twice as high as that of consumer goods and services.

Meanwhile, the fraction of import content attributable to Chinese imports has doubled during the past decade. In 2000, Chinese goods accounted for 0.9% of the content of PCE. In 2010, Chinese goods accounted for 1.9%. Federal Reserve analysis suggests the fact that the overall import content of U.S. consumer goods has remained relatively constant while the Chinese share has doubled indicates that Chinese gains have come, in large part, at the expense of other exporting nations.

Not All Chinese Import Purchases Represent Chinese Content

Of the 2.7% of U.S. consumer purchases going to goods labeled “Made in China,” only 1.2% actually represents China-produced content. Including imported intermediate goods, Federal Reserve estimates indicate about 13.9% of U.S. consumer spending is attributable to imports, including 1.9% imported from China.

Harris: US Clothes Shoppers Driven by Necessity

More than one-third of US clothes shoppers (36%) made their most recent clothes purchase due to necessity, according to results of a May-June 2011 Harris Poll. This placed the US third in making necessity-driven clothes purchases among nine North American, Asian and European countries surveyed, behind Germany (43%) and France (41%).

The next-most-popular reasons for US shoppers to buy clothes are an item being on sale (20%), and an item catching the eye of a shopper who is browsing (19%).

About the Data: Data from the US Bureau of Economic Analysis, Bureau of Labor Statistics, Census Bureau, and Federal Reserve Bank of San Francisco was used in this report.


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