Within the past month, one of this country’s leading analysts blamed the reduction of imported goods for this nation’s economic decline, and this is the reasoning he provided:
• “First,” he said, “the weakness of the U.S. economy has resulted in the growth of consumer spending falling below the 4.4% inflation rate. Thus, from 4th quarter 2007 through 2nd quarter 2008, spending increased by just 1.0%, 0.9% and 1.7%, the slowest period of growth in this decade. Since the increases were less than the inflation rate, this means that the underlying physical volume of goods being traded was falling. This weakness occurred despite a U.S. stimulative package that sent money to consumers in second quarter 2008. One result was fewer imported goods.
• “Second, the value of the U.S. dollar compared to the major world currencies fell by 26.4% from its peak in February of 2002 and July of 2008. As a result, imported goods that cost just $ 73.65 in early-2002 were up to $ 100,000 by mid-2008. Again, this has resulted in a cutback in the buying of what has become more expensive imported goods. This has also reduced the flow of imported containers entering the U.S. at Southern California’s ports.
• “Third, there is considerable angst among shippers about the reliability and cost of moving cargo through the local harbors because of recent labor negotiations with the International Longshore & Warehouse Union and concern over the cost and reliability of throughput at the ports given the controversies surrounding the Clean Truck Program. Shippers have indicated that they have been diverting their containers elsewhere.
• “A final consideration has been the fact that diesel fuel has moved over $ 5.00 per gallon. Since cargo owners must pay licensed motor carriers a premium to cover this extra fuel cost, the owners of the cargo have begun favoring warehouse facilities closer to the ports. In the Inland Empire, they have thus favored leasing facilities west of the I-15 freeway over those located deeper inland. Thus, while the Inland Empire’s overall vacancy rate was 7.9% in June 2008, Grubb & Ellis indicates it varied from a low of 5.3% in the Westend to 17% in the East San Bernardino Valley and 16.6% in the Riverside-Moreno Valley-Perris area.”
So there you have it. Tsk, tsk. Not a word about unemployment. It’s nothing but double-talk, but his readers … most of them quite gullible … just nodded their heads as though they understood his complicated and inaccurate economic analysis. What the analyst fails to bring out, and what his readers completely miss, is the fact that, because the millions of unemployed in this country no longer have the buying power their paychecks formerly gave them, a reduction in our demand for imported goods naturally caused [read it again … CAUSED] the overseas producers to reduce the amount of goods they sent us. Why is that so hard to understand? No demand … no supply. Simple.
[Next we’ll be hearing that as soon as the geniuses in Washington bailout “Wall Street” so that the bankrupt and the poor credit risks can borrow again, why everything will be just hunky-dory.]