USA: Vigorous growth because imports are not merely a burden

Along with the publication of the second-quarter gross domestic product (GDP) data, the USA revises the historical data every year. The Commerce Department’s GDP revisions reveal that the US economy has an even greater dependence on imports. And the very sizeable volume of imports is presumably going to put a visible brake on macroeconomic growth in the present year, too: we are expecting the decelerating effect from the import side to amount to 0.8 percentage points, i.e. roughly as high as was the case in 2017.

If exports are factored into the equation, though, the decelerating effect vanishes almost completely at the current end of the time series. What is more, the structure of imports demonstrates just how important trade ties are for the USA. But one thing at a time.

Thanks to the growth-boosting effects of foreign trade in the form of exports, economic growth in the United States will only be reduced, on balance, by 0.1 percentage points this year, as already in 2017. This year, though, the forecast is fraught with a good deal of uncertainty on account of the rumbling trade conflict (not only with China). We are still assuming that the dispute on the world stage will be settled without serious collateral damage because all parties involved would be among the losers in the event of a marked escalation. The US economy is set to expand by as much as close to 3 percent in the present year.

However, the importance of international trade for the US economy would only be captured to a limited extent if the focus were to be restricted to the direct growth contribution made by foreign trade. One factor showing the vulnerability of the USA as a result of the trade spat started by President Trump is the high share of US imports recorded in the field of machinery, which accounts for a percentage share of somewhat more than one-quarter, and of virtually 40 percent in the case of China. The machinery in question probably plays an important role in a number of production facilities in the USA and will indeed perform a key function in the value-added chain in certain cases.

It is scarcely possible to quantify these “indirect“ growth-boosting effects. It would therefore be wrong to carelessly equate the strong import demand from the USA with an alleged thirst for consumption on the part of the US population. In last year’s basket of imports, machinery and consumer goods were more or less neck-and-neck, each claiming a share of somewhat more than 25 percent. By contrast, cars and car parts accounted for a share of only 15 percent.

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