US Stimulus & Shifts in Consumer Spending Hit Trade Deficit

The one-way street of Globalization by Corporate America.

By Wolf Richter for WOLF STREET.

So that was inevitable, after the US stimulus efforts: The US trade deficit in goods – exports minus imports of goods – hit a record in November of $84.8 billion, blowing by the prior record established in August, according to the advance estimate of US International Trade in Goods by the Commerce Department. This advance estimate will likely be adjusted one way or the other with the more complete batch of trade data early next year.

During the Financial Crisis, the trade deficit narrowed drastically as imports fell because US consumers cut back on buying goods, imported goods, though they continued buying services, which are mostly not imported. Now the opposite is happening: Consumers bought record amounts of durable goods, but curtailed their spending on services. And much of this merchandise they bought was imported:

This is among the peculiar effects of the US efforts to stimulate the economy with government handouts to consumers and companies, with Fed handouts to the financial markets, and with the Fed’s interest rate repression. Trillions of dollars have been flying by so fast it’s hard to see them.

These effects were heightened by the Pandemic shift from buying services, such as flights, lodging, and gym memberships, to goods such as hot tubs for the deck to vacation at home, laptops to learn at home, and bike trainers to work out at home.

One of those effects is that the US stimulated the manufacturing economies of China, Germany, Japan, Mexico, and other countries where these goods are made. But they in turn aren’t buying enough US goods, for myriad of reasons, including that the US no longer manufactures many of those goods because corporate America globalized its supply chains and offshored production.

Imports of goods have surged to $212 billion in November, according to the advance estimate by the Commerce Department today. This was still short of the record set in October 2018 ($219 billion).

Exports of goods have ticked up to $127 billion but remain below the 2018 levels which themselves were just a fraction of imports at the time. And the gap between imports and exports – the trade deficit in goods — has kept widening over the years:

The value of imports is a negative in the GDP calculations. The value of exports is a positive in the GDP calculations – hence the colors in the above chart, green for exports and red for imports.

The US consumer economy has been driven by Corporate America’s relentless globalization and its ambition to have the last shred of merchandise be manufactured in other countries, particularly cheap countries. The US tax system also encourages them to do so.

In terms of retailers, Walmart was one of the big trailblazers decades ago. But now, they’re all doing it. Ecommerce makes it easier. Amazon has perfected it; on its platform, Americans can buy directly from Chinese and Indian manufacturers.

Corporate America sells a lot of goods in other countries. For example, all US automakers are big in China. GM and its joint ventures are the number one automaker in China. But these vehicles are manufactured in China, and now some of them are imported into the US.

Tesla is doing the same thing; it obtained $1.6 billion in funding from government entities in China to set up a manufacturing plant and a design center in China. The Model 3 it sells in China, and soon the Model Y, are made in China. It’s now doing the same in Germany for its sales in Europe.

The majority of Apple’s revenues come from markets outside the US, and overseas is where most of its products that it sells there are made.

US consumer goods companies, automakers, and many other manufacturers have largely abandoned making their products in the US and exporting them. Globalization has become a one-way street.

American companies are powerhouses overseas, but they have shifted more and more production from the US to other countries. That’s why even a boom in American-branded consumer goods sold overseas doesn’t boost US exports and manufacturing. But a boom in the sales of goods in the US, such as the deficit-funded stimulus-powered boom now, boosts US imports. Thanks to that one-way street of globalization.

Consumers earned more in November than in the Good Times, but a lot less than back when free Pandemic-money was massively hailing down. Read… Majestic Overshoot of Stimulus Money Ended. Faced with Second Wave, Americans Cut Back, Even on Durable Goods

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  220 comments for “US Stimulus & Shifts in Consumer Spending Hit Trade Deficit

  1. polistra says:

    Not a peculiar effect at all. The purpose of the federal government is to kill everything and everyone. The frenzy has been accelerating since 1970. Total success is near!

    • cassandratoday says:

      “…since 1790.”
      There. Fixed it for you ;)

      • Underground says:

        Lol 100%

        • Joe Saba says:

          so HERE’S GOOD ONE – our fed thieves don’t miss trick
          Back in March 2020 when there were runs on everything – including hand sanitizer
          LAST WEEK FEDERAL REGISTRY put out notice that EACH ‘manufacturer’ now owes $14,000 fee(annual) since they MADE HEALTH CARE PRODUCTS
          another $14k if you still doing it today(HAPPY new year)

      • paul easton says:

        1970 is correct. In the good old days they didn’t kill white people.

        • kevin says:

          In human history and with the stock markets (and generally most things in life), “correct” depends on which side you’re on and the timeframe you’re talking about. lol.

          In the “really good old days”, they were killing hordes of Red Indians. And they still are… since 1790.

          Y’all have a less bad new year in 2021! ;-)

        • VintageVNvet says:

          Not so damn fast on that part about ”didn’t kill white people.” PE,
          While my first alleged USA ancestor arrived as a slave on a sail boat full of ”suckers” who had paid way too much for his and their own passage, he did manage to survive, unlike many of the slaves and non slaves on that ship.
          He was white, and was absolutely subjected to the attempts to kill him, AKA work him to death, before his slavery ended, as were many others of that time and place…
          Meanwhile, it was pretty much fair game on anyone of any human kind, later known by the term ” race,” a term made up by various folks wanting to divide and conquer since those days of the early 17th century; before that, as is clearly shown by any and all contemporary writings, any and all human species were subject to becoming slaves by the drop of a protective wall or moat, etc., etc.
          Time and enough for We the Peedons to ”get over” the entire concept of ”race” and get on with the unification and coordination of our species to protect and preserve our world, and make ready to receive other species of our universe in peace and prosperity rather than hostility, etc., etc.

    • andy says:

      Frenzy? Just wait till Janet is Treasurer.

    • Sierra7 says:

      Polistra:
      “The purpose of the CORPORATE federal government is to kill everything and everyone.”
      There, fixed it for u…….
      Back in the early 1990’s when the idea of “globalization” was the fiery fantasy of corporate US it didn’t take a donkey to understand what was going to happen or what the future of the American Commons would be. Back then I was aghast at the common attitudes of too many of my compatriots. They believed it would be the answer to all capitalist problems. I had no other illusions but the reality of the future rape of the American working class.
      We live in a corporate state.
      And that is Fascism.

    • K says:

      I do not know if that is its purpose, even if that is the effect, albeit I agree with Simon Johnson’s implication that the banksters/Wall Streeters have taken over the US government. Read “The Quiet Coup” book and article in Atlantic Magazine. The resulting, government-enabled strategies of the “Federal” Reserve to create ultra low interest rates to profit banksters/Wall Street and rip off US savers combined with the foreign income exclusion from US taxation (so companies that invest in China, etc., and do not ever bring back profits to the USA can avoid paying US taxes and thereby most taxation) have gutted US manufacturing.

      This destruction of US manufacturing is more worrisome and this trade deficit is harder to change than the budget deficit, which could be readily remedied if we just taxed the vast, never-publicly- disclosed, often-illicit fortunes of the ultra rich. For the foreseeable future, until government-created AIs or some miracle were to cause most Americans to get more income and so become wealthier again, Americans will become poorer and poorer, year by year.

      • b says:

        Union-busting,illegal workforce,unenforced weak labor laws re. Legal employees,dark$ going to campaigns,and Americans loveaffair with getting a good deal,selfishness,materialism all have their roles in this situation.Remember when w.mart started rapidly expanding and there many stories of low wages,sexism,safety issues,antiunionism/busting,ridiculous tax breaks,momandpop stores Wuickly killed by low prices,childlabor-produced products like the Kathy Iteland collection at w.mart,etc.Lots of warnings about depressing local wages,lack of competition as smaller co.s couldnt sell nearly the same volume and squeeze manufacturers,truck co.s,suppliers.Low price,lots of stuff,low price,lots of stuff.$,jobs,taxes,supplychain,design all went there to build their roads,rails,science community,Military,social network,communication networks,ports.Surprise!This country has been ransacked and gutted for decades by bigbiz,politicians,and never satiated consimer who does Not Care where their mostly unneeded goodies come from.

    • DanS86 says:

      Congress needed funding. So it sold middle class jobs to Mexico, China and other Asian countries in return for those countries funding Congress by buying its debt.

  2. DawnsEarlyLight says:

    How does a foreign country make an american happy? Sell him an american product!

  3. Petunia says:

    Since the pandemic, I’ve been stocking up on items I don’t want to run out of, especially soaps, makeup, and other toiletries. Many are items from Europe, Japan, and Korea because they make better stuff and they are discounting it here in the US.

    The shortages are real. I finally found a bottle of rubbing alcohol in the drug store today, after looking since March. I am trying to keep a month’s worth of groceries and supplies on hand, but it’s an ongoing project.

    • RightNYer says:

      I had been looking for isopropyl alcohol as well to clean a CPU before putting on a heatsink, and couldn’t find anything. I ended up having to use my wife’s acetone.

    • Alberta says:

      Hi Petunia,

      Trim supply shops carry gallon jugs of it (cleans sticky off of trimmers ;-)

    • w says:

      Discounting it here=Dumping!Japanese steel makers did this in the 80’s to drive our co.s out of the industrial sector!This is a common point of friction in.world trade.We like to Dump ag. Products and who knows what else.By the way,might want to check local farmer’s market,ebay,etsy on the quality toiletries.Many handcrafted,local stuff! :-)

  4. timbers says:

    Trump should have read this, the part abt US tax policy encourages outsourcing manufacturing outside the US. Would have saved him a lot of wasted time on tariffs. And he might have actually accomplished bringing jobs back to US.

    • Illumined says:

      Isn’t that what he tried to do by making the American corporate tax more competitive?

      There was an attempt at a Border Adjustment Tax but a bipartisan effort to screw over the regular people stopped it.

      • Thomas Roberts says:

        The biggest corporations in America don’t pay tax anyways, so that really doesn’t matter. Moving manufacturing from China to poorer countries that don’t try to pull off pathetiic attempts to take over the worrld; will also reduce the trade deficit. Right now, the factory workers in China are actually getting poorer as they live in cramped shared housing and the CCP takes all the gains for themselves. While there is currently a middle class in China, it’s shrinking and it’s unclear just how big it is with all the BS the CCP says; the CCP will soon take away the middle classes money, once the current unsustainable system implodes. The middle class in China and the CCP itself (92 million members) will have alot less people in the future, when there is less money floating around, especially, as the CCP members like to take their money overseas.

        America is the 3rd most populated country in the world. Moving Stuff to less populated countries will prevent the vast majority of the problems that have happened with the China move. Basic things like pharmaceuticals and packaging (food, and everyday basic items) will have to be required to be made in America.

        To actually help the US economy the big move is to tax capital gains as regular income and ensure that the top 10% pay a responsible amount of taxes. There also has to be real competition in the marketplace, which will require a lot of simple things to be done.

        Requiring furniture and appliances (that are also required to be durable) to be made in easy to repair ways could be a major way to reduce the trade deficit (this could be implemented through environmental and sustainability requirements and laws); if these items became more standardized or easy to repair, you could easily and cheaply have a local repair person come and fix your stuff, greatly reducing the trade deficit. The value of electronics will plummet in the near future so that doesn’t worry me, as long as foreign countries cannot just rip off our stuff.

        It’s also worth noting that after the pandemic and all the stimulus ends, that people might have buying fatigue, especially if most B&M stores are gone. Eventually, I expect stores like Costco and Sams Club to be the dominant type of store for most items.

        • Michael Droy says:

          Big US companies don’t pay tax now.
          That will change in China and Asia.
          And they won’t let them get away with the games they play in Europe to avoid tax there.

          More over pretty soon even the US will have to start balancing its budget and the likes of Amazon will be targeted quickly.

        • Thomas Roberts says:

          Another Big move, would be to require all US corporations that do business in China, to publish to the public an annual report; that would detail their business with China and everything they had to do to satisfy the CCP. Lying on this report (which would have to be signed by all the top executives), would have to carry a minimum sentencce of life. That would end most BS China tries to pull against the world, pretty fast. Other countries would have to adopt their own version of said bill.

        • David Hall says:

          In 2019 Mexico became America’s largest trading partner. Auto manufacturers and others built infrastructure there. Chinese labor is not as cheap as it was in the 1990’s.

        • Wolf Richter says:

          David Hall,

          Yes, Mexican systematic wage suppression (corruption between foreign companies, unions, and government officials) has been very successful. The new NAFTA is supposed to resolve it, but probably won’t resolve it, just like the old NAFTA didn’t resolve it. This gives you some background on Mexico’s systematic wage suppression, from 2017:

          https://wolfstreet.com/2017/09/29/repression-of-wages-in-auto-manufacturing-in-mexico/

          But you’re confusing the often-touted globalism bullshit term “trading partner” with term “imports.” The term “trading partner” means exports and imports added together. They should never be added together. They should be subtracted to give a trade balance (deficit or surplus).

          The chart shows imports (red) and exports (blue) for 2019. You can see that US imports from China are by far the most of any country, with only a small amount of exports going to China. Mexico at least imports a lot of stuff from the US.

          And here are the economic areas that have the biggest trade deficits (exports minus imports) with the US:

        • lisa2020 says:

          RE: Wage suppression and general production VS labor balance.

          I just finished reading a bit about the Argentina labor strike of major agriculture union- soybeans etc. Not a solitary article globally, ever referenced the actual hourly, daily, monthly, annual wages of any of the union scales. Every article from Associated Press up, down, left right, political, religious polarities, even from Argentina were nice and antiseptic. Never even explored the impact of major Chinese contracts between Argentina and China and effects on control of workers and their expectations. Strike was affecting ports, and a significant backup of shipping and general commerce.

          Was not the least bit encouraging as to any “transparency” and any global attempt to encourage any balance or improvement of reasonable equity. A few people are getting a way with a whole lot, that will probably create a whole lot of negatives for real for a lot of the next generation of 10 year olds, regardless of race or wealth based on really a lot of nothing, but electronic and paper bits, maybe a bunch of plastic too.

        • VintageVNvet says:

          Wolf,
          Re: 2017 article cited, does not the figure you give, indicating 230,000 people applied for 4,200 jobs, indicate that the wages offered at that plant are unusually good for that area?
          One reason for this question is my certain knowledge of the fact that the greatest challenge to the USA construction industry for many decades has been the lack of interested and willing workers. And that industry in USA has always been a source of good money, and still is, and hence many folks still coming, legally and otherwise from all over the world to work construction.
          Similarly, a structural steel vendor engineer of a company globally headquartered in Atlanta told me his SoCal fab plant was in northern Mexico, and paid top wages for the area, $15/hr in 2016 IIRC, and said they were overwhelmed whenever they needed to hire.
          Also was recently reading that Mexican workers in SoCal are currently heading back to Mexico for better opportunities.
          Many situations changing faster recently, than for decades, due to the various and sundry health and financial challenges, eh?

        • Wolf Richter says:

          “Re: 2017 article cited, does not the figure you give, indicating 230,000 people applied for 4,200 jobs, indicate that the wages offered at that plant are unusually good for that area?”

          No, it’s a symptom of the systematic wage repression I discussed. There cannot be a functioning labor market when governments, big companies, and unions collude to repress wages. Systematic wage repression is Mexico’s biggest economic problem, responsible for many issues, including corrupt police and the horrible appeal of the most violent crime groups.

      • timbers says:

        “Isn’t that what he tried to do by making the American corporate tax more competitive?:

        No.

        Wolf has written on how the U.S. tax code specifically subsidizes and encourages firms to fire American workers and relocate factories/businesses to other countries, and hire cheaper labor there as replacements to Americans.

        And I have first hand experience over the decades of this. On more than one job interview/conversation with co-workers, I was told the company is re-locating and firing American workers and replacing them with foreigners, by taking their IT/business unit to nations like Poland or India, because the Federal Government will give companies tax credits to do specifically that.

        I was not surprised in the least, that I could not find in media reports any indication of Trumps advisors explaining this to him in any way. Not that he was known as a vortex seeking new facts and information, but he really did surround himself with old establishment hands clearly at variance with some of the things he claimed he wanted to do.

        • Dave says:

          Timbers,

          Your clarity and conciseness on this phenomena would be hard to match so I will not attempt such an endeavor but try to add to it….

          The tax code and globalization were decades in the making due to regulatory capture and lobbyists writing laws and legislative actions. The people we vote for sign onto bills written by lobbyists, the politicians do not write and oftentimes do not READ the bills.

          +70,000,000 people voted for him again in 2020. I can understand 2016 as most people were ignorant of his character. After 4 years of him mucking about, it becomes willful ignorance(which has no excuse).

          This started well before Trump, but he actively advanced it.

        • Happy1 says:

          It’s a little more complicated than that.

          The new lower corporate tax rates do encourage corporate location and processes in the US, that is indisputable.

          And most of the incentive to move production overseas has nothing to do with tax code, it has to do with labor cost. If labor costs 20$ and hour here and 1$ an hour in Asia, production will take place in Asia, it’s pretty simple math. And that benefits both capital and the consumer.

        • timbers says:

          Happy1,

          You must be mistaken. I have read too many articles and been told by too many company hiring managers and co workers this is in fact happening, that there are in fact federal subsidies/tax benefits to relocate American jobs to foreign nations.

          Also, please note you say it is lower labor costs not taxes that cause moving US jobs to other nations, then contradict yourself by saying lower US taxes do in fact bring back jobs.

          Which is it? Pick one.

          If corporate tax cuts bring jobs to the US, why have we lost so many after cutting them?

        • w says:

          This and Lusa2020’s comment,not surprising.a.p./thompson/reuters are deepstate/globalist propagandist.Their inherent function is gatekeeping,filtering,propaganda,Not Enlightening the masses.Trump is probably deepstate tool as many are.Follow the $,connections-six degrees of kevin bacon style,follow the policy and benefits.All these policies are Extremely well-thought out and understood by those behind the scenes who really pull the strings.This Is Not accudent,stupidity,unintended consequences.All this concentrated power/money/corruption=Clientstate.Easier to control/appease a handful of corrupted,wealthy than hundreds of millions of voters/businesspeople!!

        • Happy1 says:

          I response to the questions you posted:

          If a business pays less corporate tax in the US than elsewhere, they will move operations to the US. That doesn’t require explanation, people respond to incentives. Some of that relocation is of the fake accounting variety, and some is actual physical location of HQ and labor. This effect is an effect on the margins. Businesses locate where they do for all kinds of reasons, taxes are a factor, but far from the only factor.

          If a company can save money on labor by off shoring, they will do so. That doesn’t have much to do with corporate tax rates. And yes, the tax code does encourage this, but the real driver is low cost labor overseas, hence all low margin labor intensive easily shippable items are made in places with low cost labor. The tax code isn’t the primary driver there.

          You and I benefit from this. The cost of basic clothing and other household items adjusted for inflation has plummeted since the 60s. And about a billion people in Asia have been lifted from poverty. You can argue that lots of this stuff is cheap crap, and it is, but it would be even if it was made here.

          Overall, the standard of living in the US has been stagnant since 1970, but the blame for that isn’t that we don’t have people sewing clothes in the South. People with modern economy skills have seen a massive increase in the value of those skills. It’s very uneven, and not like the 50s, but it’s hard to see how it could be otherwise.

      • Fishbobslob says:

        If he, or any other congress were serious about restoring American manufacturing, they would pass and sign into law a requirement that all
        Federal Tax Dollars could only be spent on U.S. manufactured and sourced goods and services.
        Build in a four year window for transition from foreign sourced, if the only option, to 100% American.

        Also, make E-Verify a requirement for the tax deductability of employee’s wages and benefits from pretax business income.

    • nick kelly says:

      Read?

  5. 2banana says:

    And it never had to happen or, at least, could have been a two-way street.

    Germany still has a trade surplus with China. And fiercely protects its manufacturing base.

    “That’s why even a boom in American-branded consumer goods sold overseas doesn’t boost US exports and manufacturing. But a boom in the sales of goods in the US, such as the deficit-funded stimulus-powered boom now, boosts US imports. Thanks to that one-way street of globalization.”

    • Old School says:

      I have finally conceded that global economics is above my pay grade and I only have to figure out my own personal economics in the system.

      Glad I am retired because if you are in the labor market global economics means the sands under your feet are always shifting. When you need to provide a stable home life and stable income for your family it is a challenge.

      The thing that I hope everyone understands is whatever goods you purchase someone was probably working really hard in a stressful situation to produce it. I find it very hard to discard older manufactured items because I know the amount of blood, sweat and tears that went into getting that product into the market at a profit. It ain’t as easy as it looks.

      • Underground says:

        Truth.

      • Millie Brown says:

        The shifting under your feet is the debasement of your currency over the past 100 years not behavior economics of markets. Debasement is followed by destruction of the currency after one key event happens and the whole house of cards comes down. The event is either revolt (occupy wall street) or accounting policy “defanged” from fiscal responsibility.

        All the penny pinching “representatives” over the next 4 years are going to be some surprised pikachus when the reports come out the Fed numbers and Treasury numbers have massaged away all their accounting responsibilities. And the funny money should be spent today like the markets, Treasury and banks are all telling us to do. Congress is literally the only entity on the planet that doesn’t realize it’s paper fiat is paper confetti.

        • Millie Brown says:

          If anyone wants to join the revolt it’s just a bunch of nerds and geeks since 2009. But wall street is buying in and the billionaires are ALL hedging on Bitcoin. But I’m sure the smartest people and now the wealthiest in history just bought into a tulip bubble. The last fiat ponzi scheme lasted over 100 years. If you think Bitcoin is a scam, bubble, ponzi scheme it doesn’t matter if everyone is playing the game. Luckily Bitcoin isn’t a scam, bubble or ponzi but even if it were true it would still be the best investment in 5000 years and who knows when the tulip mania ends. If it ends in my lifetime humanity probably didn’t survive either.

        • Wolf Richter says:

          Millie Brown,

          There is collusion between some hedge funds to drive up the price of bitcoin by creating hype and buying it. It doesn’t take a huge amount of buying to drive it up (not a lot of liquidity). And then they’ll try to get out when everyone wants to jump on the bandwagon. This is a classic pump and dump scam, and you can see it from a million miles away once you cut through the fog of hype.

        • Ethan in NoVA says:

          Bitcoin and other cryptocurrencies are an ecological disaster.

    • Happy1 says:

      Germany (and Japan) have focused on high quality engineered products that require meticulous proprietary manufacturing. Very successful strategy for a high wage country.

      US focus is on intellectual property like software, and entertainment. Also very successful for those those industries, but geographically concentrated in parts of the US at the expense of the rust belt.

      Hard to say which is best long term? Probably a mix of both would be best?

      • w says:

        Not either/or=false dichotomy!Like individual investing,there beeds to be diversity investing in Sound sectors/$instruments.Al towns,cities,counties,states need toto think in terms of cashflow builtin redundancy.Great to have funds from hospitality and financials,but as we have learned,Things Change,sometimes rather quickly!Adapt or die! :-)

  6. Mark says:

    I still can’t work out why anyone ever thought throwing trillions of dollars at a pandemic would solve that problem. Moreover this debt problem, which is what Wolf highlights and what all of this really is, had nothing to do with the pandemic anyway. It was used as an excuse to paper over the cracks because since September 2019 everything had been teetering on the edge anyway. Remember the repo crisis and junk bonds almost collapsing? The pandemic was the opportunity of a life time to kick the can down the road another year or two No wonder Powell & them all moved so fast to take advantage of it!

    • Anthony A. says:

      The ONLY plan the gov has for any U.S. crisis is to throw money at it. Plain and simple.

      • Old School says:

        As I mentioned I went back and read about the Mississippi bubble. So many things are similar to now. I just read today that they had another paper money bubble 80 years later in France that ended in French revolution.

        Paper money or fiat money in theory doesn’t have to be bad, but I am not aware of any government that when things got to where times look shakey could resist the temptation of printing their way out of temporary trouble. It works for a while as the money hits circulation. So it’s the go to move til it’s too late and you are an addict.

        The danger in any bubble is that the peon will exchange.his hard earned labor for a soon to be worthless stock certificate or worthless government piece of paper.

        • rip says:

          It is my opinion that the bubbles we have everywhere today are as bad as at any time in history. Where I live, house prices are 10x median incomes. Then you look at stocks and companies like Tesla. Such a bloated, grotesque valuation would make any honest man’s eyes water. And, gee, should I buy a brand new car or one single Bitcoin? This crypto stuff is the most rotten invention in history. The government has failed to serve and protect the people. Get a rope.

        • historicus says:

          “History is the history of governments debasing their currency.”
          F A Hayek

    • char says:

      Nobody thought that it would solve the problem. But it keeps the goods sector running and hopefully can the service sector be rebooted. Not trowing money at it would mean that there is no demand for goods and you end up in an epic recession.

  7. Seneca's cliff says:

    Look at the bright side. When the US economy really collapses, after the pandemic, we will have all the garages, storage units, attics and landfills filled with stuff that can be used as feedstock for our future scavanger/recycling economy. But at that point we will realize that we would have better off making good stuff here, that we could still be using instead of picking through the worn out remains of 2 year old imported blenders and electric leaf blowers for bits we can use to keep the lights on.

    • MonkeyBusiness says:

      Assuming we don’t have a huge blame a fest aka civil war. Because Americans are the most self retrospective people on earth ….. NO.

      • Don says:

        The right will blame the left, the left will blame the right, the center will blame the right and the left, and we will all be blaming China.

        • MonkeyBusiness says:

          Nope, China is the obsession of the right. You forgot the Russians and their “interference” in pretty much everything, that’s the left’s boogeymen.

    • historicus says:

      To your point, our trade deficit is trading our dollars for disposables and soon to be outdated electronics which will end up in a landfill.
      The credit nations purchase hard assets with their balances and accumulate leverage and power. That is the arrangement.
      For those who say “Trade deficits dont matter” I say , take a look at who is prospering and who isnt.

      • Lukosodos lector says:

        Hi historicus– can you supply the source for your quotation from Hayak at 5:23? (“History is the history of governments debasing their currency.”)
        Thanks!

    • Ethan in NoVA says:

      I can buy many interesting toys cheap, but can’t afford any place to put them.

    • w says:

      Future scavenging economy??Depending on where you live,eyes open reveal that it has been here in many forms for Years!! :-)

    • John says:

      And smart people will have converted their pieces of paper, or better yet, credit card balance into useful things like building materials, screws, nails, new tires, cases of oil, ammo, high quality garden and defensive tools–things that will increase in actual value over the years.

  8. Ed C says:

    Yep. I’m retired and stuck at home in Arizona. I decided to take up a new hobby. I’ve spent hundreds of dollars on equipment from China: grow tent, LED lights, fans, pots, grow bags etc all to grow cannabis now that doing so is legal in my state. I bought seeds from Canada and the Netherlands. About the only thing I sourced domestically was potting soil and nutrients. The next ‘stimulus’ check should about cover it. Fun hobby, nurturing plants and watching them progress. Plenty of time spent on line learning how to do it right. I bought a flat screen TV, made in S Korea, with previous stimulus check.

    • 2banana says:

      But your crop will be American made…

      Forever.

    • drg1234 says:

      Hilariously, this is exactly the trope about poor people and gub’mint checks: they spend it on weed and flatscreen TVs.

      Bravo, sir.

    • OutWest says:

      Perfect example of shifting consumer spending habits! The most important step is curing it so that it lasts a long time in storage cuz you can’t consume it all at once…unless you have a lot of friends.

      American enginuity at its best.

    • Jack says:

      Ed C,

      Next thing is to take your operation to the IPO Level, surely it should pass the CES’s guidelines for a publicly listing a company!

      I mean comparing to We Work and Co you’re a champ hands down :)

    • Tom Pfotzer says:

      What I find most interesting about this story is that Ed has:

      a. identified a manufacturing process that can be run at the household level
      b. procured all necessary inputs using wits, some reading, a bit of savings which happened to be replenished via windfall (stimchek)

      Ed has also selected a mfg’g process (growing plants can legitimately be classed as mfg’g) which has a big spike of up-front cap costs (all the gear), and really low “operational” input costs (seeds, nutrients, electricity). So, if Ed can handle the up-front cap costs, he’s got a source of income and amusement (on several levels).

      What’s not said is whether the process profitable. Seems like it might be, at least for a while. If not, all that gear can be repurposed for growing food.

      Nice work, Ed.

      • Anthony A. says:

        Next thing you know, the state and feds will find out and start to tax it.

      • Ed C says:

        It did feel like a combined engineering project / business startup. R&D: research growing media, lighting, exhaust system (with charcoal filter for dank smell), heating system (winter grow in uninsulated garage), internal fans to promote sturdy stalks. Long lead item orders (seeds).
        Research germination, transplanting, watering, feeding and gender determination and all that horticultural stuff. Expenditures / investments in equipment. BTW the law is written such that the grow has to happen in a locked space and not outdoors.

        • Fat Chewer. says:

          Lol. Been running an engineering/business startup since I was 15 and I didn’t even realise! I should have included that in my resume.

    • NewGuy says:

      Get stoned and watch TV all day. Get a life loser.

  9. Joe in LA says:

    I still do not understand the reflation trade. There is zero growth in wages, labor is on its knees. And the Q3 M1/2 velocity of money numbers from the Fed (published on Dec. 22) seem like a trivial uptick from Q2. Oh, and Covid is exploding for Q4.

    This is the economy that is supposed to “catch up” with sky-high stock valuations? I don’t get it.

    • timbers says:

      Something tells me the Fed has as secret measure of money velocity that measures the velocity of trading on Wall Street – and is the ONLY velocity the Fed actually cares about.

      They probably call it M/VIP.

      • MonkeyBusiness says:

        Market Value Adjusted Money Velocity. MVAMV.

        • timbers says:

          Yes but for the Important People (VIP). That’s the most important part. (It’s club and we’re not in it).

          Or…how about M/VAMPS? (Market Value Adjusted Money Performance amongst Us)

    • Yaun says:

      I wonder what value this velocity fudge factor still has? It has now been falling through multiple boom/bust cycles. GDP is only one facet of the ‘value of money’, you could say that in our financialized country it’s even a negligible part, haha. So if with our modern QE/Not-QE/Steroid-QE tools we manage to grow money supply faster than GDP, then according to the FED it’s a sure sign that we should grow money supply even faster? As an engineer I feel there is something wrong with positive feedback loops, but I guess I’ll just have to trust our brilliant economists. After all they have always been right and anticipated every crisis long in advance.

    • Nathan Dumbrowski says:

      Work at a fortune 100 with $50B+ in total assets. No raises this year because COVID decimated the banking industry. IDK. And after working insane hours to support operations during COVID (work from home workforce, PPP and banking changes) we got $200 for our annual ataboi. But as my co-worker reminds me we get a bonus in the form of a paycheck every two weeks.

      • Apple says:

        Corporations are using covid as a reason not to give raises across industries.

        Of course, corporations earnings reached a record high in Q3 2020.

      • Anthony A. says:

        Nathan, I’ll bet the execs got bonuses this year.

        • rip says:

          Of course they did. They lie to and cheat their employees at every turn. My mother (RIP) was Human Resources Director for a smallish company (100+-) during the Financial Crisis. The President spun a tale of woe to everybody in the company that they were all in it together as they cut peoples’ wages, in some cases, by 30%. My mother was one of them to see an actual pay cut.

          My mother also had something to do with payroll where she saw everybody’s salaries and paychecks, and lo and behold while almost every single person suffered a pay cut, the President and COO got RAISES.

        • Happy1 says:

          I’m a partner in a health care business, and this is not the case for us. We are consistently paying increasing wages for our staff to meet inflation demands, if we don’t, our employees will leave for better offers. The money at the top is far less than 20 years ago adjusted for inflation. But health care is a little different as it is constrained by the deflationary efforts of Medicare and Medicaid.

      • Paulo says:

        I worked in aviation for almost 20 years and that was the standard meme; whine might be more appropriate.

        I finally learned to appreciate they were always going broke, forever. I told my 2nd to last boss, “You pretend to pay us and we’ll pretend to work”. My last flying job was part time, cash, and was so lucrative I told the owner I couldn’t accept what he was paying. Seriously. I would come in and do a trip…maybe 2 hours work and he wanted to pay me for a full day. Cash, under the table. We finally settled on a 1/2 day pay and breakfast….that we ate together at a local cafe. And he paid!

        I really believe it depends (in some organizations) if they think they have you by the short and curlies. If you don’t need the work……

        • Ed C says:

          I worked for a big corporation into my early 60’s. It became apparent by the way I was treated that they just wished that I would go away. I finally did and then worked as a contractor for a small firm doing engineering work for this same corporation. Now my employer was desperately hoping that I wouldn’t leave as he got a cut of the hours I billed. What a contrast.

      • w says:

        Also noted that u.s. And some other foreign bank branches closed at record numbers in 2019-2020.Much consolidation and reduced staff/hours.BMO/Harris in n. IL. Closed local branch in March and went mostly to barebones drivethru staff for most of this year.Also noted other local merger in smaller banks.

    • historicus says:

      One must remember the calculation for velocity.
      The denominator, money supply, is up circa 35% this year.

      • Tom Pfotzer says:

        Precisely.

        There is no “velocity”. Household gets a paycheck or (lately) a stim-check, HH buys from Amazon/Walmart/other conduit to 1%, and the money gets “banked” by recipient into a Treasury Bill…parked for the duration.

        No velocity. No “multiplier effect”. Once-N-Done.

        And that’s why the money supply has – absolutely MUST – be expanded.

        If the money printing stops, the economy stops within months. It’ll be fast.

        This is one reason the Bitcoin and precious metals crowd … is a crowd.

        U.S. is still a rich country. This can go on for a while. Lots of momentum.

  10. Martha Careful says:

    Re: “The US consumer economy has been driven by Corporate America’s relentless globalization and its ambition to have the last shred of merchandise be manufactured in other countries, particularly cheap countries. The US tax system also encourages them to do so.”

    No matter what you think about trump or biden, the destruction of the American economy has been going on for many decades, and now, the pandemic exposes that structural decay very clearly. The on-going story of stagnate wages, offset by corporate greed, where the corporate few game the system and cease to invest in American growth. That’s one of the key drivers behind super low Treasury yields, i.e., future growth was already weak, not it’s crashing to zero.

    Even if polarized politics are set aside — and the pandemic — how will the future of a more automated society, run by AI robots and insane CEO’s result in anything good for anyone (other than a few billionaires)?

    I think 2021 will evolve into a slow recovery, that fades into stagflation, then darker times, unless of course, you have tons of money to burn.

    Also see FRED’s:

    (a) Average Weekly Hours of Production and Nonsupervisory Employees, Manufacturing, Hours, Seasonally Adjusted (AWHMAN)

    (b) Real gross domestic product per capita, Chained 2012 Dollars, Seasonally Adjusted Annual Rate (A939RX0Q048SBEA)

    • Tom Pfotzer says:

      Martha, I think you read the tea leaves correctly. A long, slow grind down as the middle class becomes poor.

      The question … for some years now, as these trends are decades in the making, and have been obvious for decades .. the question is “what should the average household operator do to secure their economic future?”

      Top- down help? Are you kidding?

    • 91B20 1stCav (AUS) says:

      Martha-sagacious, as you consistently seem to be. Every round in this group firmly in the black…

      may we all find a better day.

  11. Boomer says:

    As they say “you can’t make this stuff up”. Just hope people don’t use the stimulus to pay down the credit cards they ran up on the old crap they bought. Bad business for the banks. Buy the kids more expensive motorized skateboards, scooters, bikes, cars, etc for the kids to use for 5 minutes then leave laying around the yard.

    • GK says:

      Absolutely the best policy.

      My neighbors are excellent at squandering every penny on their ungrateful hellions and I take great please in throwing out all their Chinese made treasures left scattered through-out the neighborhood.

      If Congress would just keep giving them money, we’d all be saved!

    • MonkeyBusiness says:

      Our corporations engage in share buybacks while these people engage in debt buybacks.

  12. Memento mori says:

    Let me see if I understand this.
    US government prints money and sends it to its citizens.
    US Citizens rush to buy stuff made in China with freshly printed dollars.
    Chinese citizens work harder to make and send real stuff to US in exchange for paper money coming from infinite supply of Fed money tree.
    Rinse and repeat till smth breaks.
    It all looks like an extended warranty plan for the US citizens, how can you lose?

    • Jeremy Wolff says:

      Yup. We don’t want to hold on to the worthless money. Let the Chinese have it.

      • No1 says:

        Neither do they. They have been cutting their Treasury holdings for quite a while.

    • No1 says:

      They convert the US dollars into valuable things while it still holds value (eroding faster and faster even compared with other currencies). If the US continues down this path, it’ll struggle to convince the Chinese to keep exporting to them. At the same time, they also suck all productive industry from the US. They’re not winning quite as hard as they do when the US maintains the value of its currency, but they’re still winning.

      • No1 says:

        Oh, and it’ll be terrible for the US when inflation results from money printing. I can’t think of a country that did well out of it. This is already happening, it’s not imaginary.

      • historicus says:

        No1
        Indeed. The trade credit nations like China turn the currency into hard assets…..the trade deficit nations exchange their currency for disposables and soon to be out of date technology items.
        A decade goes by and the net result becomes obvious.

        • anonymouse says:

          Michael Hudson addresses this most articulately in the video “Polarization, Then a Crash: Michael Hudson on the Rentier Economy”

          Chinese invest and lend for production and infrastructure, “we” lend for buying preexisting rent seeking services and production, raise the prices, write off the profits with depreciation, sell the thing, rinse and repeat while debt burdening the population with the cost of everything not paid for by taxes on “we”…

      • w says:

        Valuable things would be key industries like food processors-JBS and Smithfield pork as well as Prime U.S. FARMLAND AND WATER RIGHTS!!They have supposedly said in ccp docs. That they aim to make us the Farmers for them and it Seems like that plans underway as Historic Farm Bankruptcies have occurred in the last few years.If you have $$,buy U.S. Farmland before They do!

    • The gentleman’s agreement when you run a trade deficit is that you won’t denigrate your currency. (US has done that). China was coerced into accepting 30Y bonds in payment. Sterilization of trade deficit is promised will not cause US inflation. (It did in asset prices but labor costs were offset. A bond cannot be repatrioted or sold for cash, but it can be used as collateral to buy other assets.) Threat of default on those bonds held in reserve was raised, or outright stealing of China’s reserves for Covid fund. China behaved with remarkable calm, sold some reserves, and now their currency is rising against the dollar. Is China now taking dollars to settle? They must be, or buying crude oil at inflated prices. No markeup in price of imported US goods, China would rather have market share than profits, they use the recession and command economy to keep exports flowing, while other exporting nations suffer a slowdown. China fills all global supply chains when economy recovers. US consumers sicken and die, they are replaced. There’s a consumer born every minute. PT Barnum

      • Memento mori says:

        How was China coerced into buying 30 year bonds?

        • Disincentives: printing that much cash directly undermines it’s value. Bonds are more fungible. The real question is what are they doing now? Are they building bond reserve positions? Are they taking cash, gold, time shares at Mar-A-Lago? The port of LA is 7/24, turning containers around empty. Bernanke was very proud of the sterlization gambit, but eventually the dollars do come home to roost, after they are eviscerated.

    • b says:

      China is rolling out nationwide digicurrency. They have amassed great goldwealth and stolen tech,tradesecrets,and other illgotten advantages.They seek to throttle trade through South Chinasea.They have tried to hoard and control important Rare earth metals.They steal seafood out of the sovereign waters of neighboring countries while wining and dining exrcs from m.stream media,our government and universities.What could go wrong???!

  13. HotTub says:

    So, this country is spending more than it makes (imports vs exports). Lovely. What’s new. I think I’ll try that.

    Since I’m retired, I have a certain amount of income. And since I’m retired, the things I produce – in other words, my exports, are zero. And since I’m thinking my income won’t be sufficient for all the UNNECESSARY things I want in life, let’s open a credit card account and max it out. And when I hit my personal debt ceiling on that one, I’ll just vote to raise my personal debt ceiling and apply for another credit card. And when that debt ceiling is maxed out, I’ll vote to raise my debt ceiling again – rinse and repeat. And then I’ll rinse and repeat again. And rinse and repeat more more time again… until the credit card companies finally say no more!

    Sound like a country you’re familiar with? Does to me, as foreign buyers of U.S. Treasuries are slowing their purchases of this country’s debt, which is causing the Fed to buy it all up.

    Geez, that’s my solution. I need to find a personal Fed to keep me “solvent”! Hmmm, my family? Nope; my friends, not a chance;

    At that point, I guess I’ll default and declare bankruptcy and walk away from all the debt, sticking it to others. At that point, I guess I’ll go back to living within my means, hoping those holding all my debt don’t send me to the better place!

    On second thought, I think I’ll just continue living within my means.

    • char says:

      Countries are not people and macro economics don’t work like micro economics. States can (even should) indefinitely increase their debt, but not too fast.

      • Paulo says:

        Char,

        I don’t agree. Certainly long term financing is required for major projects and investments. But a state, any type of governmental entity, is a reflection of and representative for, their citizens. Free spending without care and attention to the citizens needs and responsibilities is misconduct, imho. We owe our responsibility to the state in taxation, and they owe us responsibility in return by respecting the time and effort it took to earn their funding.

        As my Dad used to say, “There isn’t a money tree out in the backyard”. Nor, is there one in every park or state forest.

        • CZ says:

          Stephanie Kelton begs to differ on the “money tree.”

          Seriously though, the Treasury and the Fed have been creating unprecedented quantities of money over the past few years, and the standard fear — “inflation” — isn’t materializing.

    • doug martens says:

      Excellent! Very well put!!

  14. Micheal Engel says:

    1) US Import is shortening it’s thrust since the 2008 low. 2020 is a test of 2018 low.
    2) In the next decade import will shrink and USD will rise.
    3) UST 10Y peaked in 1981 @15.8%. At the top there were x2 recessions : 1980 &1982.
    4) There are always two sides in each bubble.
    5) During the 1980 and 81/82 recessions SPX was grudgingly down.
    6) Beyond that peak, on the right, there were x4 recessions. 2020 Covid-19 recession is the deepest since the 1929/33. In the 20’s there were x4 recessions : 20/21 @(-)38.1%// 23/24(-)25.4%// 26/27 @(-)12.2% and 29/33@(-)26.7%. // The 1910’s were no picnic, before, during and after WWI.
    7) The 10Y was falling from the 1929 puny spike towards the 1945 bottom @1.7%. There were were x4 recessions on that down slope. The deepest was in 1937/38 @(-)18.2%.
    8) Since 1945 recession @ (-)12.7%, going uphill to 1981, there were x7 recessions.Non were deep.
    9) The 3M was hugging zero in the 1930’s and in the 1940’s as on the right hand side of the bubble. From from zero to zero, that’s how the Fed operate.
    10) In the 40’s women were the work force, producing “industrial
    goods” for export. They saved, because there was nothing to buy.
    11) When the men came back the baby boomers were born.
    12) The DOW and RE took off between 1949 to 1966, in a 17 years bull run.

    • historicus says:

      “2) In the next decade import will shrink and USD will rise.”
      USD will rise..? The supply must depress … and they just added about 35% to the supply.
      OUR government wants the dollar to fall….because OUR government wants a better trade balance and cheaper money to pay back the debt. But there will be no payback. Only more debt creation and money supply creation.

  15. Brant Lee says:

    Could robotics even the manufacturing field? Do we have to wait until there are absolutely no jobs left?

    If anything USA was sitting on shelves besides Chinese made, I would pay more for it.

    Put a cap on mark-ups that monopolized retailers can charge for imported goods. 100%?

    • Anthony A. says:

      “Could robotics even the manufacturing field? Do we have to wait until there are absolutely no jobs left?”

      Just what exactly would you propose we start manufacturing now that 90% is already gone overseas?

    • MCH says:

      Robotics is going to even the manufacturing field. Just not in the US, or not as much.

      Cause a robotics engineer in China still costs less than a robotics engineer in the US. And where else are you going to find similarly skilled labor. Actually, could you even find a robotics engineer in the US? (that last line was sarcasm)

      But the truth of the matter is that factories in China are already adapting robotics. They are smart enough to know what’s going to kill their business model, so they’ll do it themselves first. It’s Clayton Christensen done the right way. Disrupt yourself before someone else does it for you.

      • Tom Pfotzer says:

        Well said, MCH.

        Robotics may well bring back mfg’g to the U.S. at some point, and at some level. But it’s unlikely to bring back many jobs.

        The point people need to remember is that the bulk of the work humans do is rather easy once you “know how”. Automation relentlessly finds the “easy” and removes it, and the person doing it, from the production equation. This has been going on for ages, it’s just happening way, way faster now. And the scope of automation – the set of stuff it can do – is widening really fast.

        The question isn’t whether automation is going to happen or not. The question is “who gets the benefits of that automation?”

        What would you have to do in order to “own” automation and get the benefit of it?

        A lot, right? It’d be pretty hard.

        How hard will it be to wrest those “benefits of automation” away from … the people that currently have them?

        Easier, or harder? You young people – consider well. Don’t use emotions. No rage, no self-righteous indignation. Cold hard logic.

        Upstream, you see an example of a fellow (Ed C.) who just up and decided to take matters into his own hands. Not much automation, but he’s got a start: he owns a production process. Didn’t need to ask permission, just did it.

        • w says:

          Benefits of automation go to the owner and shareholders if the rest of the co. Is well-run.

      • Happy1 says:

        China is already in trouble because their labor cost is now above the rest of Southeast Asia and Africa. Capital will always find the lowest labor cost. If China can’t innovate, their time in the sun because of low cost labor will end in the morning 10 years and their economy will stagnate.

    • Ethan in NoVA says:

      Robots have been at work in the factories since 70s? 80s? They’re not new.

      • nick kelly says:

        Right. The famous videos we’ve all seen shows them welding the body panels. This is practical. Most assembly isn’t, e.g., installing starter in ICE or glove box in any car. To quote Elon after his robot factory fiasco: ‘humans are underrated’.

  16. Normansdog says:

    forget the deficit, it is only numbers in a computer and means nothing.
    The US exchanges “computer numbers” for real stuff like iPhones and cars manufactured in China – this is the best deal ever.

    • historicus says:

      Normansdog
      Where is your iphone from 2010?
      Where is your car from 2010?
      And the creditor nations used the money for infrastructure, military, and other long term hard asset investments.
      So how’d that go?

      • Happy1 says:

        My 2010 car(s) are all still running. Actually 2005 and 2007 respectively. They will probably be running in 10 years.

        My phone is 2016, near end of life unfortunately.

        • Lisa_Hooker says:

          Cars are 1999 and 2004 (not counting the 1966 and 1972). Smartphone is 2008. All are going strong. 2016 end-of-life?

    • Lisa_Hooker says:

      Sure, akin to trading cash for “magic” Bitcoins.

  17. Cmoore says:

    I have always thought a chain such as Dollar General that only sold American made products would do gang busters The company would probably have to through America setting up manufacturing facilities to produce product At first it would be limited to what it could handle but as more people got on board producing American goods it would be a bonanza Just an idea

    • Antwan says:

      There’s a chain in the Buffalo area called Made In America. Always very quiet whenever I pass by.

      • Shiloh1 says:

        I think everything Sears sold 50 or more years ago would have fit that description.

      • BuySome says:

        Walked into a Walgreens for the first time ever about a year ago to buy a long made American hair product from around upstate N.Y. area. Showed on-line as a normal stock, but in the store full of 10 zillion pieces of crap that I do not want, they did not carry the one I was after. Of course, they could order it in a few days if I don’t want the Dapper Dan brand….as though I couldn’t have done that myself at home! Result-I still have not bought a single thing from Corporation W ever, probably never will, and American Manufacturer X has blown another chance at a product sale. We are screwed by the inept corporate-minded business structure in place. Let them eat the rotten French cake. And no, I won’t buy it online. Corporation “A” and any others can eat that same just dessert. Oh, ma hair.

    • Apple says:

      They’d have to change their name to Million Dollar General

    • Happy1 says:

      Labor costs are way too high. No one will pay 3 times the price for daily staples.

  18. Micheal Engel says:

    13) The 10Y might be osc for several decades, in accumulation, on the
    right hand side of the chart, including NR.

  19. Drunk Gambler says:

    “One of those effects is that the US stimulated the manufacturing economies of China, Germany, Japan, Mexico, and other countries where these goods are made. But they in turn aren’t buying enough US goods” – simplification.
    Those are “US Goods” made in China. Apple and Nike get major profit, China gets 50$ from 1 iPhone sold, Apple gets the most of it. Reality is more complicated as always…

    • Wolf Richter says:

      Drunk Gambler,

      Yes, it’s a lot more complicated… China gets to design and build the factories and the roads and railroads and the shipping terminals, and it gets to train and hire the engineers that design all that, and the workers to build all that. And the Chinese construction equipment makers get to design and make the equipment; and Chinese industrial engineering companies get to design the manufacturing plants, and the industrial robots, and all that. And thereby, China gets to educate and train an entire generation of engineers that do that, and workers that implement it…

      As you can see, offshoring manufacturing has a deep and wide impact on an economy, not just on the laid-off workers of the closed factory.

      Corporate America, with its focus on short-termism, share buybacks, offshoring, and tax benefits, is in the process of ruining the US economy, as you can see, if you open your eyes.

      And NO, the stock market is NOT the economy.

      • Memento mori says:

        Exactly, China has industrial capitalism, we have financial capitalism.
        In order for industrial capitalism to make money, they have to produce things.
        In order for financial capitalism to make money, asset prices must go up.
        This game can go on longer than anyone can remain solvent.

        • Paulo says:

          And how long have we heard the preening about being a ‘service economy’. Serve needs and wants with credit and borrowed money. Sell arms, and tariff countries that displease. This will come to a crashing halt when the US dollar is no longer used for energy sales and/or reserve currency. You’ll recognise the end is nigh when people are picking their own fruit and vegetables instead of using Latin Americans.

        • Lisa_Hooker says:

          The government of China (such as it is) is run by engineers. America’s government is run by lawyers.

      • rip says:

        “Corporate America, with its focus on short-termism, share buybacks, offshoring, and tax benefits, is in the process of ruining the US economy, as you can see, if you open your eyes.”

        Thank you. I wish there were a way to stop it. Sadly, I’m losing hope.

      • Happy1 says:

        This has played out in Asia for 60 years. The low wage countries start out with low wage manufacturing and progress to high level engineering as the wage scale increases, with Japan, Taiwan, and South Korea preceding China. It works really well for those countries and for the US. We get less expensive goods, and they get to build their economy.

        Once the prevailing wage reaches about 10K a year, things change dramatically for the other country. There are still many countries in Southeast Asia and Africa that have lower wages. All the easy leverage of low wages have been harvested. China is very close to that barrier now, and China has the unique disadvantage of a lumbering government owned manufacturing sector that is not operating with profit motive. Check back in 10 years, the easy gains in China are almost all past. Vietnam and Myanmar and Bangladesh all of Africa are very close behind anxious to get the lowest wage clothing and manufacturing business. Does China have what it takes to move from 10K annual salary to 20K? There are still 400 million poor people in China making less than 1,000$ a year, if China doesn’t figure that transition out, they will probably have a civil war on their hands.

        The US is in the position it is in largely because the US dollar is the reserve currency of the world. That will eventually end. So it may not end well for us either. But I wouldn’t be so sure that China is the ultimate winner in this.

        • Stephen C. says:

          There seems to be a big effort by China to bully it’s way into Southeast Asia (again, per their history) and at the same time the rich and connected in China are poised to move offshore from China to Vietnam, Cambodia, and other places, even Africa, rather than share the new prosperity with their compatriots.

          Seems both the US and Chinese populations might be too old to take to the streets.

          Meanwhile, it’s pretty clear that, judging by the huge voter turnout for all the usual suspects, the American public remains thoroughly mystified.

    • Wolf Richter says:

      Drunk Gambler,

      And if Apple invests this profit overseas, whether in a mailbox account in Ireland to escape US taxes, or by building a facility in China, it also just supports other economies. Yes, the real economy is more complicated than just stock market bs.

    • nick kelly says:

      China got a little over 8$ for the 649 $ retail i-phone 7 in late 2016. The numbers and suppliers today for the 1000 phone will be little changed. China does not engineer or manufacture the key chips. The big slices of the pay out for the roughly 230 $ manufacture cost (almost all components) went to US and Japan (68$ each) with SK and Taiwan following.

      There is a lot of talk about robotics taking jobs. Usually overblown, in a smart phone it isn’t. The components are made by robots. And the i- phone isn’t ‘made’ in China, it’s just assembled there.

      But isn’t that true of a car plant? Nowhere near, as Elon has discovered and now tells us: ‘humans are underrated’ The main use of robots in the US is just packaging from bulk to retail. Germany, the world’s most successful economy has backed off robots in car making some time ago and sold its largest robot outfit.

      In case anyone imagines I am a China fan or apologist: I would describe the US/ China relationship (Aka: Chimerica) as a joint Corporate US / Chinese CCP scheme to exploit Chinese workers.

      As for the narrative that the US is a debt- crazed spendthrift while China is a prudent investor, only the first part is true. Up until 2020 the Chinese credit expansion was the largest in history. One estimate puts real estate at 40 % of the GDP. They built the world’s largest mall complete with kilometer long ‘Venetian’ canal. 90% vacant, it may have been demolished by now. The People’s Liberation Army runs its own business empire. Huge bond defaults by SOE’s (i.e. government) once big news, are now occurring almost weekly. When banks pressure them for payment, they are hauled before the local CCP commissar and lectured. And you know what comes after that.

      Where it ends who knows but REAL China expert Ann Stevenson- Yang thinks it will crash.

      • Wolf Richter says:

        nick kelly,

        You need to back off citing this $8 claim from four years ago. It’s BS. It just happens to suit your story line. The real number is hard to come by. But it’s a lot higher than that, including that some parts are made in China, are exported to Thailand, or wherever, where they’re assembled into a component, then sent back to China to be assembled into the iPhone.

        • nick kelly says:

          I was quoting not narrating. If Markit’s data is BS it sure has a lot of customers. CBS, Reuters, Bloomberg. Only the Wall Street Journal let me past the paywall, here are the Jan 2020 numbers they quote:

          ‘Markit estimates that for every iPhone X that gets sold, $110 is sent to Samsung, the South Korean conglomerate that makes iPhone displays. (Samsung also produces the Galaxy series of phones, making them Apple’s chief rival in the smartphone market.) Another $44.45 finds its way to the iPhone’s memory chip suppliers: Toshiba Corp. of Japan and SK Hynix Inc. of South Korea. A little money goes to Singapore; a little goes to Brazil; a little goes to Italy; and a little goes to Corning, N.Y. The vast majority of money goes to Apple in Cupertino.’

          Note how fast the factory cost is consumed. The display alone is about 40%. Then comes the chips. How much left is for Taiwan based Foxconn, before the (Mainland) Chinese are assemblers are paid?

        • Wolf Richter says:

          Yes, that nonsense study got cited endlessly. IHS Markit doesn’t know anything about manufacturing engineering. It’s a data aggregator and business survey company.

          If Apple wanted you to know where the dollars you pay for an iPhone went, it would tell you.

          Markit cannot even establish the actual negotiated costs of the components that anyone in the supply chain pays.

      • w says:

        Heard many stories of their makework construction jobs including highrises,ghost towns-empty,officeparks,etc.Been hearing about the imploding local bondmarkets/realestate fiasco.Good! :-) Why should that happen only in U.S. And U.K.?Still waiting on the Con of Wisconsin Foxconn to be properly punished!People lost home through eminent domain for that scam!!

  20. Cobalt Programmer says:

    1. Stimulus money to a regular US person is $600. 330 million will receive around 200 billion. Where the rest of 700 billion is going?

    2. Thank the Gov. here in US. In India, people get nothing. Zero. There are people in India with no checks in their mailbox…

    3. If government really wants to boost economy, invest in infrastructure. It pays a lot. Totally regulate how the medical bills are paid. Also education.

    4. If a person is so poor, what difference does it make he brought a gaming station or invest the money in Tesla shares?

    5. Corporations transcend nations. Just because a company is born in USA doesn’t mean they stay there always. They have a whole world to conquer.

    6. I hope they send another $1200 stimulus check (2000-600). The drama over $2000 vs $600 is just like a lovers-quarrel. Soon they will forget the drama and our extra money will be sent to us

    7. I have no trouble with Mr. Engels. I will use paragraphs or bulletins appropriate to the talking points.

  21. andy says:

    Missing in these charts are our huge exports of Intellectual Property (for free).

    • MonkeyBusiness says:

      Free? No. For cheap labor + ballooning deficit + increasing debt or as Wolf likes to say it ….. Debt Out of the Wazoo.

      Free is better than what we have.

      • andy says:

        Nothing that Joe can’t fix. In the next 8 years. After the last 48.

        • MonkeyBusiness says:

          Not sure if you are being sarcastic, I am presuming you are.
          Joe’s cut from the same cloth. His old mate Obama’s biggest legacy was T and there’s tons of reasons for that.

  22. Antwan says:

    Wolf, as someone in the industry, Amazon isn’t really selling straight from Chinese manufacturers. It’s more enabling fly by night mainly Chinese middlemen to easily sell to Americans. If past retail spending was 70% remaining in America and 30% for Chinese manufacturers, Amazon is doing 15% for Amazon, 20% for American services such as shipping, and 65% back to China. Effectively exporting an extra hundred billion or so a year.

    • rip says:

      I hate Amazon. They are the epitome of everything wrong with this economic model, and they are bigtime enablers of counterfeit goods. Imagine you design and build a product, then somebody comes by and copies it and then takes all your customers. Amazon is disgusting.

      • Lisa_Hooker says:

        Imagine someone implemented a more efficient methodology and under-priced the competition. Disgusting?

        • 91B20 1stCav (AUS) says:

          Lisa-akin to how the Soviets kept their weaponry R&D costs down by the use of more-or-less effective industrial espionage in foreign nations (capital expenditure did, eventually, catch up with them-though it seems we may have accelerated the manufacturing of the dreaded capitalists’ military rope only to have its particulars harvested and forwarded to the workers’ paradise as soon as it was produced, thus intensifying our efforts on the hamster wheel of creating better, more sophisticated and deadlier rope. How this affected the global footprint and legacy of the Cold War can only be guessed at…).

          may we all find a better day.

      • w says:

        Who forces everyone to buy al the Nonessentials and feed the beast?Americans love their new,shiny thing.Been watch this nighmare unfold and trying to warn Anyone willing to listen that deals and shiny new things are Not important in life especially at the Real Cost of your individual materialism.Hate Bezos,the publishing-busting smarmy Fake philanthropist.Generally pay extra for stuff by going through direct co.Saving some jobs.

  23. Swamp Creature says:

    Now that we’re doing a lot more cooking at home, after they closed all the restaurants in Montgomery County, MD, I started reading the labels on the food I buy at the supermarket to avoid getting sick from all the preservatives they put in the food to prolong shelf life, but I noticed a garlic spice that I bought that made me sick and had a label, “packaged in China”. So now grocery stores are now buying a lot of their transportable food items from China. The store manager confirmed that about 30% of the items in supermarket were imported from China.

    • Anthony A. says:

      Just don’t buy any dog food or dog treats made in China. Really bad news.

      • anonymouse says:

        Anyone who eats anything from China is playing Chinese roulette with their health.

        Chinese are liars and counterfeiters. You cannot trust their ‘standards’, and that includes so called Chinese ‘organic’ foods.

        Beware of mixed packaged foods, especially at Costco. The bullshit line, “sourced in North America and Asia” means a few items are American or Canadian grown, along with national pesticides, the rest is Chinese, using pesticides too toxic to even use here. Goji berries and pumpkin seeds an example.

        Look for the green price and weight stickers on the racks above the product for organic only and then read the labels. Some products require a microscope to find them and other food items are not labeled as to country of origin. Dump them on the floor and complain at the service counter. Costco is the biggest vendor of organics in the world, an encouraging trend.

    • char says:

      Doubtful if it is not an Asian supermarket. Garlic is special with respect to China because they are the largest exporter/producer. It is like finding out that your olive oil comes from Italy.

      • Wolf Richter says:

        There is excellent garlic and olive oil from California.

        • Memento mori says:

          Olive trees are decimated by the olive fruit fly in California. Look it up.
          The fruit fly will lay an egg on each olive that it will feed on the fruit and develop into larvae. By law, You can’t use those olives for eating in California (obviously too disgusting) but you can make olive oil with them. I would be surprised if many table olives originate in California as there is no easy way to eradicate this pest and most groves I know only produce oil which I will never buy anyway.
          Buying food products in China is insane.

        • Dan Romig says:

          The last weekend of July is “World-famous Gilroy Garlic Festival” time!

        • Russell says:

          Wolf – Watch the documentary series “Rotten” on Netflix. They have an interesting segment on garlic as well as several others on the evils of our food industry.

        • Stephen C. says:

          UC Davis at one time tried to inform the world about real olive oil vs. fakes. I don’t know if that was a one-off study or an ongoing service. But the message was clear: Buyer beware.

          Label reading is one of those life skills that, like budgeting and saving, is really tedious but could save your life in the long run.

        • Wolf Richter says:

          Stephen C.,

          Yes, buyer beware, read the small print… and even then there is global fraud in olive oil. French markets in the Provence are infamous for selling small artisanal-looking bottles of “local” olive oil, but the olive oil comes from Morocco or wherever. This stuff pops up in the French papers.

          And in the US, the issues are figured out in court. From April 2018:

          “Deoleo USA, the manufacturer of Bertolli olive oil, settled a class-action lawsuit last week by agreeing to pay $7 million and change its packaging and testing protocols, according to the settlement agreement.

          “The complaint, filed in 2014, alleged that the company misrepresented its products by labeling them as “imported from Italy.” The seven plaintiffs also questioned whether the olive oil could be extra virgin quality ….”

      • Whatsthepoint says:

        It’s relatively easy to grow garlic in pots…I’m getting ready to do that on my balcony…expect to see a lot more homegowing of all kinds….

      • Happy1 says:

        Very very little of the food you are eating is from China. Lots of stuff from Mexico though for vegetables out of summer season.

        • Swamp Creature says:

          Happy1

          Lots of the produce is from Mexico and Latin American countries, even in the summer. Just read the lables

      • 728huey says:

        There is a ton of garlic imported from China. The main issue with Chinese garlic is that it’s grown in not so ideal conditions (ground covered in sewage, heavy pesticides). The easiest way to find out whether your garlic is sourced domestically or from China is to check the bottom of the bulb. Domestically grown garlic has part of the roots (stringy stuff) still attached at the end while the Chinese garlic not only does not have roots attached but also had the end of the bulb bleached white.

    • Swamp Creature says:

      Here’s the label on the garlic I bought at Giant Food

      McCormick Gourmet
      Organic Garlic Powder

      Non GMO Organic certified

      McCormick & CO Hunt Valley, MD
      Packed in USA
      Product of CHina

      Here’s the label on my favorite Olive oil

      Filippo Berio
      Extra Light Tasting
      Olive oil

      Packed in Italy with selective olive oils from Greece, Italy,
      Portugal, and Tunesia

      Why can’t we get out food from the good old USA????

  24. Swamp Creature says:

    Not only all the manufacturing jobs but all the service jobs that don’t require hands on contact will be gone. We are moving towards a society where the only jobs left in the US will be those that require hands on contact, like landscapers, Dental hygenists, auto mechanics, plumbers, carpenters, etc. All the other jobs will be outsourced to the cheapest foreign labor country with no pollution, environmental, or safety standards. Based on recent trends it looks like the American people are OK with that.

    • Jeremy Wolff says:

      Don’t count the dental hygenist out so fast. I had a virtual eye doctor. While that appointment was a sham and I rescheduled with a real doctor, I wouldn’t be surprised to see a future where you sit in a chair and the dentist in the video screen tells the assistant where to scrape, etc.

      • JRGJr. says:

        Remote robotic surgery from across the operating room can just as easily be done from India. Sorry about that blue screen of death in the middle of the procedure.

        Every time you use an ATM card instead of going into the bank, order online, without talking to an employee–hopefully in the U.S–whenever you use automated checkout, you are helping to destroy your country, the livelihoods of your fellow Americans and your future. Resist!

    • Sam Rapheal says:

      Air carriers ‘dirty secret: major maintenance (“D” checks) offshored long ago.
      Small issues (including “AOG”) handled by non-union contractors.

      AOG: Aircraft on ground (“show stopper” issues)
      Level D check: complete examination/overhaul mandated by mfg.

    • RightNYer says:

      The American people are only okay with it so long as they maintain their lifestyle. Right now, it works because we’re in that interim period between the destruction of the real economy/money printing and the point at which that money isn’t worth anything.

      So people get to buy stuff and be comfortable.

    • Happy1 says:

      It’s been this way for almost 50 years and counting.

  25. Most of the export data to China is crude oil which could very easily be diverted to another country.

  26. Micheal Engel says:

    1) Export is down because 737 Max is grounded for 2 years and USD have shrunk for 9 months.
    2) US flatbeds protect the global trade. Amphibious Ships equipped with F35Bs and Ospreys and the large carriers are our biggest export to the world.
    3) US is #1 in military export.
    4) US real service industry is our military forces, our air force and special forces spread all over the globe.
    5) All the above are excluded from chart.
    6) The Fed real #1 job is US national interest.
    7) We can live without the junk from China, but without us people
    can lose their freedom, or might not be alive.
    8) If the world will be dissected, China will lose it’s biggest customer.
    9) China will get their first lesson during the next deep US recession.
    10) Cass 1 chart will keep dropping < 2008 low. The flow of containers
    from Chine will drop to an all time low.

    • CZ says:

      “China will learn their lesson when the US economy implodes” is some kind of bizarre silver lining.

      • TinyTim says:

        China will learn its lesson after they replace the US as the world’s financial superpower. The lesson to be learned is that in time, eventually everyone screws up and they get replaced by someone else. So China will get its chance next and they will eventually be replaced.

        – As the world turns

  27. CZ says:

    Not sure I believe this data, the President swore he was going to slash the twin deficits. Surely he hasn’t been doing nothing the past 4 years.

    • Swamp Creature says:

      He never drained the swamp or even tried to. That’s one reason he lost.

  28. James says:

    re SWAMPCREATURE. “30% of food sold in US supermarkets is from China,”
    Yeah a shopper really needs to read the fine print….which is sometimes there & sometimes not.
    COSTCO is starting to sell frozen “asian food, like noodles & sauce” made in PRC (not Taiwan & also frozen foods from Vietnam & Thailand & Taiwan.
    I lived in 9 different countries & I’m OK with the shrimp from Thailand and
    the foods from Korea & Vietnam & Taiwan…BUT I will never knowingly buy any food product from PRC!
    Remember the baby formula & dog food scandals?
    Unfortunately, most consumers are half asleep &/or clueless & they just buy whatever “looks good” on the labels.
    One has to watch out though for the old “DISTRIBUTED BY XYZ Co. Inc. in
    LA Ca or San Diego” in bold print with a tiny “product of china.” if you can FIND IT!

    • Stephen C. says:

      In our shopping trips to Costco and Whole Foods, my wife often forgets her glasses so I take a small magnifying glass. I’ve learned a whole new, fascinating lingo. But the quick and dirty method is if it has added sugar, take a pass. That’s the real poison to watch out for. So 95% of the choices can be passed over, and you concentrate on the remaining 5%.

      • Swamp Creature says:

        Stephen C

        As a result of the pandemic I now pay a lot more attention to what I’m buying at the grocery stores and take-out restaurants. Safeway’s deli used to serve some healthy food, like mixed vegetables etc. Now they have nothing but fried chicken and other crap which is unhealthy. The one thing they had that looked OK was mashed potatoes. I bought a pound or so, but when I got to the checkout counter I noticed from the label that at least a dozen chemicals and other unknowns were added to the mashed potatoes. The checkout clerk told me they added all that stuff to prolong shelf life and make the potatoes taste better. I took a pass on buying it. I think 5% may be too optimistic . More like 2%

  29. Micheal Engel says:

    11) Biden job #1 is to prove that he isn’t in China pocket or an agent
    of China.

    • Yancey Ward says:

      The Chinese will cooperate with Biden to accomplish this as painlessly as possible.

  30. LT says:

    I’m not worried about the rising China and falling USA meme.
    It makes no sense because everything China is being praised for economically has to do with China adopting the very type of financialization and other ways of the USA ….which is “falling.”

    At the end of the day it’s just two over-financialized, authoritatian, worker-hating countries bickering.

  31. Micheal Engel says:

    Benjamin Graham Mr Market is not inflation/ deflation.

  32. Crush the Peasants! says:

    Correlation of changes in GDP to changes in standard of living?

  33. Gerry says:

    In the 1990 BBC show “Postcard From Shanghai”, presenter Clive James travels to Shanghai in 1989, at the same time as students there were having demonstrations against the repressive government. At the international airport, Clive notices that arriving passengers are bring in televisions from abroad. China did not produce enough TVs for its citizens, it was no manufacturing powerhouse then. Thanks to the USA offshoring its manufacturing base (one number is 50,000 American factories gone) under Clinton and Bush, and China’s admission to the WTO, I can buy a super duper Chinese-made TCL 55″ Series 6 TV with Roku at Costco for $400, delivery included. There is your trade deficit.

    • Stephen C. says:

      I remember how the Chinese authorities got all bent out of shape when foreign athletes were arriving for the Olympics were wearing masks. Now everyone wants us to wear masks. Life’s little ironies.

      Happy New Year, everyone!

      • 728huey says:

        Back then people were wearing masks due to all of the air pollution. But a couple of pandemics later, it became fashionable in China to wear a mask.

  34. YuShan says:

    Giving more stimulus money to the poor is not effective, because they will use it to pay for food instead of buying stocks.

    • rip says:

      That’s what I’m using my stimulus check on, though I’m not “poor.” I will load up the pantry with beans and rice, pastas, a few canned goods and other household products. No “splurging” for me. As everybody is spending like crazy, I’ve been in austerity mode.

  35. Martha Careful says:

    A small problem going forward, with all assets, but primarily housing, is the wage status of a fairly typical young family, e.g., maybe a dude that works at costco or walmart and a wife that works at a tat parlour — whatever.

    Let’s say Johnny makes $20,000 and the misses makes $17,000 +/- 25%

    Then, along comes the pandemic and home prices and rents go up and these two have plans to get a house, because they have kids living in shoeboxes and the rent is killing them …

    This type of family that may partially be helped by stimulus, may qualify for a mortgage, but lack a decent down payment — but, thankfully, bank lending standards will be reduced next year to help families like this — and basically reboot the GFC all over again, because the average stagnate wage combined with home values is never going to make sense.

    See at FRED:

    Employed full time: Wage and salary workers: 35 to 44 years: Men, Thousands of Persons, Not Seasonally Adjusted (LEU0252889200A)

    Average Sales Price of Houses Sold for the United States, Dollars, Not Seasonally Adjusted (ASPUS)

    PS, it doesn’t matter if they worshipped trump or hated him

  36. Swamp Creature says:

    The effects of globalization

    Out major supermarket chain “Giant Food” use to be a locally based family run corporation that provided excellent service for the entire DMV area for over 50 years. Then they were bought out by Stop & Shop located in Boston. Then this merged Corp was bought out by some nameless global corporation located in the Netherlands.

    Now, they are just like the rest of these supermarkets with isle after isle of junk food and imported frozen food from who knows where. Employees, are hired from temp services at minimum wages. I asked the manager why they sell so much unhealthy food and he told me that “That’s what sells” Bottom line profit is their number one priority Fortunately, they still have some of the old timers who can provide decent service. They get better benefits than the newcomers.

    • Happy1 says:

      Where is DMV? Sounds like where you get your driver’s license…

    • Robert says:

      @swamp

      I stopped eating fish almost entirely. The amount of plastic in the pacific is off the charts. Eat only atlantic fish if you must.

    • Sam says:

      Mirroring lowest common denomination sales/service w/(new)car biz.
      Local Toyota mega store (parent is mega cap public corp.) entire (seasoned) admin/sales/customer service staff (unknown on the service tech component) decamped to a (family owned) competitor.
      Replacements seemed recruited out of high school (or rehab) and programed in constant upsell mode.
      Any questions outside what they were ‘told’ to respond to resulted in a blank eye look and seeking their supervisors authorization/input.
      Note; I was there to pick-up a rental car. Price was 2x from previous 14 months. Happy New Year to Wolf and all members of these esteemed boards.

  37. Micheal Engel says:

    1) The minimum wage is rising in 2021. Finally, our workforce will be able to compete with China.
    2) Cash in the black market, cannibalization of the min wage hours, is more. Small businesses owners can use some cash from two sources : their customers and bank’s envelops. Cash distributions is bookkeepers blessings.
    3) “Niet” to to socialism by republicans, is a Trojan horse for the next gov. It’s an old virus. Repression is a proven vaccine. Mutations bypass repressions.
    4) More power to the people. More cash in their hands. Grabbing assets it’s not their fault, is an old Innovator’s Dilemma, when less is more !!
    5) American Zoomers will find jobs in two service industries :
    in the growing military service, or in the shrinking restaurants sector. The rest, the filth & the dirt, the do it with your hands and brains, will be done by immigrants.

  38. 91B20 1stCav (AUS) says:

    Wolf-definitely close, if not the summit, of your top-ten alltime efforts. A true pleasure to read, even if the implications are grim. Many thanks.

    may we all find a better day.

  39. Calvin says:

    People are stocking up now for three reasons:

    Prices are going to the moon with inflation. It’s a way to make a high return on your money spent today, versus that spent tomorrow which will get you less–food packaging a strong example, we are all familiar with.

    Supply chains are getting more shaky and things you absolutely must have, need, want or might like may not be available in a few months, or, will be of lower quality.

    Money spent today on goods and essential services is money not spent during Joe Biden’s presidency, which is also a form of voting.

  40. Swamp Creature says:

    I forgot to add, the supermarket chain I was referring to above also does not even own the inventory it sells in its store. They lease the space on their shelves to private food wholesalers. The wholesalers determine what goes on the shelves, the location (top or bottom) and the source of the inventory. If something doesn’t sell it is pulled from the shelf without warning, customers be damned. Hot selling items are placed in the middle of the shelf for prime viewing by customers. The country of origin of the merchandise is the last thing the grocery store is concerned with. When they put country of origin labeling on the merchandise at a Safeway near where I shopped at work, as required by law,, nearly every item in the produce department was from a foreign country, mostly Latin American countries, and this was in the middle of the summer growing season in the USA. The public that shopped there was high end and they started boycotting the store as I did. Went by the other day and the Safeway was gone and replaced by a parking lot.

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