Wiseacre
Retired USAF Chief
In today's WSJ there is a story (sorry, no link, it's proprietary) that talks about recent changes in developing countries that are resulting in rising import prices here, with a focus on China. US import prices, excluding oil, have risen 8% over the past 2 years, and would be higher if you included oil. Which is a shift from the trend over the past 20-30 years. Essentially, workers in China and other emerging markets want higher wages, and that combined with other inflationary pressures means higher export costs to the US. Among other things, shipping costs have risen: 3 years ago it cost about $1000 to ship a 40 foot container from China to our west coast; now it costs $2100.
So what does all that mean? For starters, you might see less offshoring where US companies move business elsewhere. US manufacturing has begun to rise a little bit lately, that trend should continue. But - as prices for a lot of stuff we used to buy from foreign companies goes up, our purchasing power drops. Our standard of living will decline, I think we're already seeing that now.
And, if we can keep our own prices down and quality up, our exports could rise. Have to keep the dollar from getting too strong though, I suspect we're entering an age when exchange rates are going to take center stage as economc warfare becomes more prevalent. (That's my opinion, nobody else's.)
But - we're going to have to be really smart about our fiscal and economic policies, we need to make America the place to invest and start a business. Right now, it just isn't. We've gotta fix our educational and training systems to be more effective at turning out young people that can innovate and produce stuff. We've gotta produce more of our own oil, and keep working on ways to be more energy efficient.
Could all this happen? Sure, but the pols have got to get their stuff together first. I just don't see that happening until something big occurs to force a change.
So what does all that mean? For starters, you might see less offshoring where US companies move business elsewhere. US manufacturing has begun to rise a little bit lately, that trend should continue. But - as prices for a lot of stuff we used to buy from foreign companies goes up, our purchasing power drops. Our standard of living will decline, I think we're already seeing that now.
And, if we can keep our own prices down and quality up, our exports could rise. Have to keep the dollar from getting too strong though, I suspect we're entering an age when exchange rates are going to take center stage as economc warfare becomes more prevalent. (That's my opinion, nobody else's.)
But - we're going to have to be really smart about our fiscal and economic policies, we need to make America the place to invest and start a business. Right now, it just isn't. We've gotta fix our educational and training systems to be more effective at turning out young people that can innovate and produce stuff. We've gotta produce more of our own oil, and keep working on ways to be more energy efficient.
Could all this happen? Sure, but the pols have got to get their stuff together first. I just don't see that happening until something big occurs to force a change.