Is the import honeymoon over?
Products from foreign countries are often lower in price. But is this advantage of imports disappearing? N.C. State University economist Mike Walden discusses.
“Let me look at one example here, which is very close in North Carolina, and that’s clothing apparel. Prior to what I would call full-fledged globalization in 2000, clothing prices were rising in our country about 2 to 3 percent per year. And of course North Carolina had a big clothing manufacturing industry.
“Then we had globalization. North Carolina, of course, lost a lot of those jobs; a lot of those jobs went to foreign countries like China. And because of the price advantage or the cost advantage in countries like China, prices were lower. Clothing prices actually went down. In fact over the 2000s decade, clothing prices were falling an average of 4 percent.
“That’s why I have all of those ties, for example, … in my closet — because they were cheap.
“But here’s the thing: In the last year, we’ve had a turnaround. We’re now beginning to see clothing prices begin to rise. Now they haven’t gone back up to where they were before globalization, but the point is they are now rising about 3 percent a year.
“The reason is Chinese labor costs are actually going up. This may present an opportunity for clothing manufacturers, perhaps, to look again at the U.S. I’m not predicting that we’re going to have the textile and apparel industry go back to its glory days here in North Carolina, but the economics of manufacturing clothing certainly have changed over the years, giving the U.S. perhaps a better situation for capturing some of that market than in decades.”Category: Economic Perspective