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Opinion

Made in China: US can't afford high cost of low-priced Christmas gifts

US retailers and economists hail the Christmas shopping season, but consumers' binging on holiday gifts will produce more red ink than growth and jobs. Their purchases are nearly all imports – most from China. For real recovery, the US must regain its manufacturing market share.

By Alan Tonelson / December 20, 2011

Kerry Neiderer has her hands and chin full of toys as she waits on line at Toys R' Us in West Manchester Township, Pa., on Thursday, Nov. 24, 2011. US retailers hope holiday shopping will spur profits and economic recovery, but the vast majority of Christmas gifts are imported, widening America's trade deficit and national debt.

AP Photo/The York Daily Record, Jason Plotkin

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Although the first predictions of a record holiday shopping season have been scaled back, hopes remain alive that December retail sales will still give the US economy a badly needed lift. But consumers’ binging on holiday gifts will actually produce much more red ink for America than growth and jobs. For nearly all of their purchases are imports, and new government data make clear that this year their debt-creation will hit new records.

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Consumption by Americans does generate greater US output and therefore more employment – but mainly when the goods and services they buy are produced domestically. When Americans buy imports, nearly all the growth and jobs are created where these products are made – overseas.

Worse, like any items bought by Americans with credit, purchases of imports financed by borrowed money (as US trade deficits show has often been the case) add to the country's already bloated national debt. Relatively speaking, nowhere are these leakage and debt-creation effects greater than in the consumer goods categories long dominated by products manufactured abroad, and that account for nearly all holiday gifts.

The way Christmas shopping affects the economy is best seen by examining 24 categories of consumer goods where reliable data from the US Census Bureau can be found. For all of 2009, Americans consumed just over $143 billion worth of these consumer products. Nearly 80 percent came from abroad, and nearly 45 percent were produced in China alone. In 2010, these purchases rose to just under $158 billion, with slightly higher percentages of goods imported from abroad and China. (The figures cited would be even higher if the Census data for consumer electronics products were included, but that data contain too many internal contradictions to be reliable.)

The domination of imports was nearly total – between 95 and 99 percent – in such popular gift categories as games and toys other than dolls or stuffed animals; gloves and mittens; shirts for men and boys other than work shirts; and suits, coats, jackets, and skirts for women and girls. In a broad men and boys’ apparel sector encompassing everything from athletic clothing of all sorts to raincoats to down jackets to swimwear, 98 percent were imports. And all but 3 percent of women’s non-athletic shoes are imported. China was the biggest single country supplier in most of these and other individual sectors as well.

Import penetration is lower, but still extensive (ranging from 84 to 87 percent), in sectors like men and boys’ suits and coats; women and girls’ dresses; fine jewelry; and men’s non-athletic shoes except for sneakers. Imports account for 69 percent of neckties and scarves for men and boys and 76 percent of power-driven hand-tools.

The 2011 figures won’t be available for another year, but all the signs point to even greater import domination in this year’s Christmas shopping. Output in the US economy, for all its troubles, generally remains much stronger than the import-swamped Christmas gift industries. It is up 3.94 percent over the last 12 months, according to the latest year-on-year data. However, imports in the Christmas goods sectors are up by 5.8 percent during virtually the same period. So Christmas gift imports are on track to outpace any gains in America’s output in this sector.

Because penny-wage countries like China have major competitive advantages in manufacturing labor-intensive goods, imports’ prevalence in holiday shopping bags and carts has become taken for granted. But American policies can make or break the fortunes of domestic US producers of these items as well.

Consider the situation in 1997, the first year in which detailed import penetration figures can be calculated. Americans then still made more than 57 percent of the men’s and boys’ suits and coats they bought, a third of the men’s dress and sport shirts, more than 70 percent of the women’s dresses, nearly 40 percent of women’s blouses and skirts, nearly half the fine jewelry, nearly two-thirds of the power hand tools, and more than 27 percent of the toys and games.

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