The Diminishing Effect of Buying Imports VS Investing in U.S. Made
Every dollar spent on American Manufacturing returns at least $1.89. If that dollar circulates and is used again on Made in USA products, the dollar continues to compound for the good of the community. The opposite can diminish a dollar offshore.
“While fair trade with friendly countries is important to businesses and consumers, this data shows that continued investment in domestic production will create millions of jobs and opportunity for growth. A modern infrastructure upgrade is needed in the U.S. that integrates the coming technologies of the 4th industrial revolution, including 5G, AI, and IoT. That’s where massive resources should be used – with an emphasis on the return of the costs to local communities & manufacturers,” said Jason Blount, Chief Information Officer of Made in America.
Figure 2 summarizes how expenditures on imports are distributed between the local content that stays in this country, imported content that goes overseas to our major trade partners, and overall (last bar). For example, of all consumer expenditures in goods that are made in China, more than half stays in the United States as payment for local content. For the United States as a whole, the overall share of local content of imports in the U.S. is about 43%. So the .55 cents shown in the graphic above only applies to China.
Importance of Manufacturing in the U.S. Economy
Manufacturing is an essential component of gross domestic product, which was $2.33 trillion in 2018, and drove 11.6% of U.S. economic output, according to the Bureau of Economic Analysis. Manufactured goods comprise half of U.S. exports.
Manufacturing adds a lot of value to the power of the U.S. economy. Every dollar spent in manufacturing adds $1.89 in business growth in other supporting sectors, including retailing, transportation, and business services.
According to the Bureau of Labor Statistics, the United States has 12.85 million manufacturing jobs, which employs 8.5% of the workforce, and pays 12% more than other jobs. Yet, 89% of manufacturers are leaving jobs unfilled because they can’t find qualified applicants, according to a 2018 Deloitte Institute report. The skills gap could leave 2.4 million vacant between 2018 and 2028. That could cost the industry $454 billion in 2028.
Sources:
Federal Reserve – How Much Do We Spend on Imports? https://www.frbsf.org/economic-research/publications/economic-letter/2019/january/how-much-do-we-spend-on-imports/
Source: https://www.thebalance.com/u-s-manufacturing-what-it-is-statistics-and-outlook-3305575
