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Inflation, Higher Labor Costs In China Won’t Have Much Effect On U.S. Prices – Study

August 8, 2011: 01:53 AM EST
Inflation and labor cost increases in China are not likely to have much impact on U.S. consumer prices, according to economists at the Federal Reserve Board (San Francisco), despite the record trade deficit the U.S. is running with that country. They found that goods and services from China accounted for only 2.7 percent of personal consumption spending by Americans in 2010. Less than half of that represented the actual costs of Chinese imports. The authors say that even when the imported content of goods made in the U.S. is taken into account, imports from China account for only a small part of total U.S. consumer spending. In fact, 55 cents of every dollar spent on an item labeled “Made in China” goes for services produced in the U.S.
Galina Hale and Bart Hobijn, "The U.S. Content of “Made in China”", Federal Reserve Bank of San Francisco, August 08, 2011, © Federal Reserve Bank of San Francisco
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