A very interesting analysis by Galina Hale and Bart Hobijn of the San Francisco Fed concludes that very little of American personal consumption spending actually ends up in China. When Americans go buy stuff, they’re overwhelmingly buying things that are made in America:

In part, this reflects the fact that 67 percent of spending is on services rather than goods, and services are 96 percent made in the USA. But even durable goods, which only account for about 10 percent of total spending, are mostly made in America — 66.6 percent to 12 percent for China with the rest coming from the rest of the world. In fact the only category of spending in which Made in the USA doesn’t account for the majority is clothing and shoes. What’s more, even a lot of the spending on imported goods actually reflects the cost of shipping them around the United States:

Table 1 shows that, of the 11.5% of U.S. consumer spending that goes for goods and services produced abroad, 7.3% reflects the cost of imports. The remaining 4.2% goes for U.S. transportation, wholesale, and retail activities. Thus, 36% of the price U.S. consumers pay for imported goods actually goes to U.S. companies and workers.

This U.S. fraction is much higher for imports from China. Whereas goods labeled “Made in China” make up 2.7% of U.S. consumer spending, only 1.2% actually reflects the cost of the imported goods. Thus, on average, of every dollar spent on an item labeled “Made in China,” 55 cents go for services produced in the United States. In other words, the U.S. content of “Made in China” is about 55%. The fact that the U.S. content of Chinese goods is much higher than for imports as a whole is mainly due to higher retail and wholesale margins on consumer electronics and clothing than on most other goods and services.

Hale & Hobijn draw from this the narrow point that inflation in China is not likely to have a substantial effect on the price level in the United States. There’s no reason, in other words, for the Fed to worry that inflation in developing countries is a reason for tight money at home. But the broader point, as Doug Henwood says is to serve as “an antidote to the widespread belief that the U.S. is hollowed out and all the action is in China.”

One of the many ways in which the United States disadvantages rail vis-a-vis automobile transportation is that rail operators in the United States are typically subject to onerous “Buy America” rules that do much more to constrain the purchase of European or Japanese rolling stock than is the case for automobiles. This is ostensibly a job-creation measure, but as Alon Levy argues, it’s an extraordinarily expensive one since the main practical impact is to simply restrict the number of bidders on any given contract:

Amtrak’s Sprinter locomotives, compliant with both FRA regulations and Buy America, cost 30% more than the European locomotives they’re based on, and 50% more than competitor products built only for passenger trains rather than also for freight trains. A 30% premium works out to an extra cost of about $100 million, providing 250 jobs.

And yet it’s not the case that you earn $400,000 a year in a blue collar locomotive construction job. Something’s gone wrong here. It’s worth considering that if trains were 30 percent cheaper to buy, then for the same appropriation we could buy 30 percent more trains. In this case, that could mean 21 extra locomotives. Assuming we don’t just leave the extra locomotives on the side of the road to rot that, too, is something that would create jobs operating the trains. Ultimately, for any given amount of money that we’re prepared to spend on rolling stock, it’s hard to see why spending it wastefully would increase employment. What’s more, the main reason why the US doesn’t have much of a train manufacturing industry is that we don’t have a lot of trains. If we build out a more robust intercity train network and invest in expanding intra-city rail transit, then building rolling stock in the United States will naturally become a more and more attractive proposition (intercontinental train shipping is hard). But it’s much easier to do that kind of robust network build-out if our train buying is a reasonable value-proposition rather than if we overpay relative to Europe and Japan.