Barry Ritholtz sheds some light on the mythology that US consumers buy mostly from China. In fact, only 2.7% of our overall US consumption comes from foreign-made goods. Two point seven!
Perhaps a reason for believing China’s share of the US consumer market is [so high is] how often we see the Made in China label. They dominate the toys, clothing and electronics that get sold in stores like Wal-Mart and Target and Toys-R-Us.
Morgan Housel explained:
“A common rebuttal I got was, “How can it only be 2.7% when almost everything in Wal-Mart (NYSE: WMT ) is made in China?” Because Wal-Mart’s $260 billion in U.S. revenue isn’t exactly reflective of America’s $14.5 trillion economy. Wal-Mart might sell a broad range of knickknacks, many of which are made in China, but the vast majority of what Americans spend their money on is not knickknacks.”
We also spend far more on others than we realize: Housing, Commodities (especially Food and Energy) and Services (Health Care, Financial, Accounting, Education etc.). Housel noted that in 2010, “we spent 34% of their income on housing, 13% on food, 11% on insurance and pensions, 7% on health care, and 2% on education. Those categories alone make up nearly 70% of total spending, and are comprised almost entirely of American-made goods and services.”