Wal Mart shoppers are running out of money.

Sounds like you believe trade deficits have a detrimental impact... Feel free to participate in Supposn's thread where I have asked people to make the case.

Rising prices and less jobs are a double wammy. But if the american people stop buying inexpensive goods from "China they they will have to buy the more expensive ones from the US. Which will create more jobs and more money to spend. But the question is which way are they better off? Is it better to have a smaller paycheck and less expensive goods or a larger paycheck and more expensive goods. I say it does not matter philosphically. One needs to do the math to know which is better and as of a few years ago we were better off with much cheaper products even though the paychecks were slightly smaller. We dont need to fix the trade deficits they will fix themselves.

What is important is that the world economy is connected and there will be an equalibrium reached. Prices will go up as long as people in China are willing to work for less. (a situation that is rapidly changing)

But what we do not need is for prices to go up and jobs to be lost for reasons that are not related to the world economy reaching an equalibrium. Printing money causes prices to go up but there is no benefit to the world economy (healthy economies float all boats) and artifical government intrusions into the market stifle growth and cost jobs.

We do need lower prices and more jobs but boycotting chinese products is not only not the answer but struggling people just won't do it. We need to let the economy find its balance and most of all we need to get out of the way while it does it. Then we will have a healthy economy that actualy grows and creates jobs.

Perfectly stated, Doc!

It is a factor in unemployment. It will be a factor as long as workers overseas are willing to work for less wages. As a result of our buying all their products they are now demanding higher wages and working conditions and getting them at a very rapid pace.

We could slap tarrifs on their products but since the US still exports and ton of stuff and they would just slap a tarrif back on us that would not work. (we are after all the world's third or fourth largest exporter and tarrifs on those exports would hurt us a lot)
http://en.wikipedia.org/wiki/List_of_countries_by_exports

We could ask people to buy American but given the choice to by a $4 pair of gloves from China or a $26 pair of gloves made in the USA few will.

We couild find some presently unstated method of forcing Americans to buy American but that would leave China to continute to capture the world market for exports. Or we could encourage the Chinese to increase the wages and working conditions their workers get while the wages and working conditions of our own workers decreases (I don't think there is any other option). When the wages their is eqaul to the wages here the process will stop. But at least we can continue to enjoy a share of the world markets for exports. In the meantime while our wages fall if the cost of products falls more then it does not matter. If we stop printing money and stop punishing business then we stand a chance that the cost of products will fall faster than wages.

Correlation does not imply causation (cum hoc ergo propter hoc): a faulty assumption that correlation between two variables implies that one causes the other.

Fallacy of the single cause (causal oversimplification): it is assumed that there is one, simple cause of an outcome when in reality it may have been caused by a number of only jointly sufficient causes.

Post hoc ergo propter hoc (false cause, coincidental correlation, correlation not causation): X happened then Y happened; therefore X caused Y

Take your pick...

Trade deficits play a factor in Employment as well. Consider how many retail jobs exist because the owner(s) can afford to hire additional people due to the lower costs of importing products. If forced to purchase American products at a cost increase of 400%-600%, those businesses would have to lay off workers to make up the difference in order to stay in business.

If a majority of Americans actually went along with the "Buy American" propaganda, the US would suffer a massive decline in our standard of living and unemployment would skyrocket.... but our trade deficit would disappear.

Free Markets work best and they must be free of both force and fraud to function. The solution is to stop trying to micromanage economic behavior and allow individuals to make their own choices free of government interference. Reduce government involvement in the economy to protecting the public from force and fraud and the economy will boom like never before.

That's the Progressives objective... equalize all the nations of the world to the same economic level; raise the third world up while dragging down first world economies and all the nations can meet somewhere in the middle. Of course it's a recipe for disaster on a global scale but what the hell...

Stop printing money?!? Stop punishing business!?! Them's fighin' words!

It all comes down to an efficient use of capital. If America builds widgets at a higher cost than they can be produced in another country, then our capital is being spent inefficiently and would be better served in another sector of the economy. Using government to force people and business into supporting inefficient uses of capital, as would be the case with protectionist policies, actually weakens our economy for what should be obvious reasons.

Consider this inefficient use of capital in other terms. The typical efficiency of a liquid fuel turbine is 30%, that means only 30% of the fuel's BTU's are converted to usable energy, the other 70% is wasted. A high efficiency turbine runs at 60% efficiency, leaving only 40% of the fuel's BTU's as going to waste. So we have two turbines with the same capacity, lets say generating 50MW of power, one uses twice as much fuel as the other to accomplish the exact same amount of production. Which one makes more sense to use? Well, if you listen to the protectionists, we should burn twice as much fuel (capital) to get the same amount of production because it's "patriotic" to waste our energy on inefficient allocations of capital.

By the way, GE builds those turbines with efficiency ratings from 28% up to and exceeding 60%, and they are one of only 3 companies in the world capable of building a turbine reaching, or exceeding, 60% efficiency, the other two being Siemens of Germany and Mitsubishi of Japan.

I don't offer that analogy just because it's a good one, it's also happens to coincide with my next point. Capital Goods are the strongest exports in America. The Capital Goods sector is primarily made up of farming and construction equipment, along with the more high tech equipment such as GE's turbines and US made military hardware.

So when we import goods from developing countries, the ones accused of using slave labor, they tend to use our import dollars to purchase our capital goods to - develop - out of their third world stature. They need modern farming technology to feed their populations, construction equipment to build their infrastructure, turbines to provide electrical generation, and military hardware to protect all of it from jealous neighbors. These improvements lead to better living standards, better benefits and pay, greater environmental awareness, and even increased demand for America's non-capital exports.

Barriers to free trade, such as tarrifs, subsidies, and other protectionist measures, only impede that process, hurting both the developing country and our own.

I can agree with most of that.

The REAL problem is how can American business be competitive when our government imposes heavy taxation and all sorts of costly regulations on our businesses while competing nations have none?

You would think those intelligent politicians in DC would have figured this out before our manufacturing base is completely destroyed and our middle class eliminated. I guess its more important to fund ever growing government and entitlements for the poor, elderly, unions, teachers, etc...

Do you have a specific example? Because it sounds like you're grasping at hypothetical straws with that comment.

You yourself asked in the OP if there were "other" factors regarding lower consumer spending.

Economist says hard times will linger
May. 15, 2011

The Great Recession has caused a big change in the way businesses and consumers save and spend money. In short, the U.S. savings rate is going up; spending will be restrained, cautious.
...
“Businesses and consumers are saving more. They’re raising reserves. Consumer spending is permanently subdued,” Allsbrook said.

The U.S. savings rates for the typical household has risen to 6 percent as a portion of after-tax income. In the recent pre-recession days of easy money, no-money-down home loans and betting on the come, Americans typically saved less than2 percent of their take-home pay.

“Now, I’d say 6 percent is the floor of the savings rate,” Allsbrook said. “Consumer spending is going to taper off as this year continues.”

I find it entirely plausible that Americans have increased their savings from 2% to 6% by purchasing less cheap-plastic-crap from WalMart. Seriously, just take a look at some of the polling data, American's aren't buying into the rosy rhetoric about the economy:

New York Times: Nation’s Mood at Lowest Level in Two Years, Poll Shows
April 21, 2011

Americans are more pessimistic about the nation’s economic outlook and overall direction than they have been at any time since President Obama’s first two months in office, when the country was still officially ensnared in the Great Recession, according to the latest New York Times/CBS News poll.

Amid rising gas prices, stubborn unemployment and a cacophonous debate in Washington over the federal government’s ability to meet its future obligations, the poll presents stark evidence that the slow, if unsteady, gains in public confidence earlier this year that a recovery was under way are now all but gone.

So is it more likely that Americans are "out of money" or that they are simply in a financial defense mode over fears of another economic downturn?

Again, I don't think it's a matter of "can't" buy them. Consumers are being pinched but I think there's a self-defense mechanism that kicks in with *most* Americans that causes them to be more mindful of what they have to spend money on while choosing to cut back on the more frivolous purchases.

it is if you specialize in buying cheap crap. if the main thing that powers our econ is buying things cheaper...then the only jobs we end up with are retail jobs...and those pay crap...and thus we need cheaper stuff to pay for...becuse our retail jobs of selling cheap crap to people does not pay us enough to buy..the cheap crap we are selling....and in order to make the cheap crap cheaper so we can buy it...we move that production of cheap crap to country with a crap econ and pay there workers even worse to make even less quality...cheap crap...

The US has some of the most productive workers in the world...but yet the only way for them to keep there jobs is to get payed what someone doing 1 3rd the work in China can do.

Competing nations certainly have fewer government hurdles than American businesses but to say they have "none" is an exaggeration. We would certainly be better off as a nation if the government were to limit it's involvement with the economy to protecting the public from force and fraud. Everything the government is doing beyond that, only serves to impede the US economy.

Despite government's efforts to drive away business, we remain the worlds number one manufacturer of goods... But that could certainly change if the Anti-Business-Pro-Debt steamroller known as Congress is allowed to continue on it's suicidal path of wanton destruction.

As for the middle class, it's a statistical group that cannot be eliminated. If you're concerned about the US economy shedding "middle class" jobs, we lose far more jobs to technological innovation than we do to outsourcing.

Outsourcing impacts less than 0.2% of US Employment

Outsourcing often receives much media and political notoriety. One possibility as to why outsourcing is the receipt of such attention is because outsourcing strikes a negative reaction amongst the general population. The impact of outsourcing on US employment is however unjustifiably over-exaggerated.
...
A considerable greater number of Americans lose jobs to technology or domestic competition than in comparison to outsourcing. Computers and other technologic advancements eliminated high volumes of typists, telephone operators and bank tellers jobs. Half a million jobs for typists and word processors were lost from 1988 to 2000 not as a consequence of outsourcing but as a result of technical progression.

This does not mean that advancement in computer technology is detrimental. With the advent of digital cameras Kodak removed 15,000 workers because of the decrease in film popularity. But the US economy is both resilient and innovative, job loss will be compensated with job created. However, it is only when jobs are outsourced do the job losses appear to make the news.

I get to say it again:

Do you have a specific example? Because it sounds like you're grasping at hypothetical straws with that comment.

Yes "none" was an exaggeration, but companies in China do not have anywhere near the government impediments imposed on them as companies do in the USA. This is why much of our manufacturing base has disappeared. Yes, we still are the largest manufacturer in the world, but maybe not for much longer.

Outsourcing is a different issue. Companies who close their doors are not outsourcing. They did not outsource to China or any other nation. Those jobs are gone. Outsourcing is typically a procedure utilized by the multinational corporations.

These two graphs are not primarily the result of out sourcing.

US Manufacturing Employment As A Percentage Of Total Employment