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Page added on July 27, 2011

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Autos in the US Economy

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Yesterday, I did a simple rough calculation about General Motors to try to get at how much manufacturing job loss one could attribute to foreign competition versus automation and productivity increases. Various commenters objected that my assumptions were too simplistic, particularly in neglecting the domestic content in foreign autos and the importance of shifts in the supply chain over time.

To try to address these concerns, I’m going to repeat the exercise using national statistics for the components of GDP and employment by industry.  The GDP statistics are supposed to keep track of the value-added via supply chains and correctly account for foreign versus domestic components of production.  For time reasons I’m going to have to spread this out over a couple of posts. Today, I look at autos as a fraction of GDP from 1967 to 2010. In particular from BEA Table 1.5.5 I took the total US GDP and also US consumption of “Motor Vehicles and Parts”. Then from Table 4.2.5 I took imports and exports of “Automotive vehicles, engines, and parts” which I can also divide by US GDP. Then, by adding the exports to the consumption and subtracting the imports, I can get an estimate of domestic manufacture.

All of these are shown in this graph:

You can see the rise in imports from much less than 1% in the 1960s to about 2% of US GDP in the mid 2000s (until the great recession hit). The other interesting factor is that consumption of autos (as a fraction of the economy) started a serious decline in the early 2000s. That’s going to complicate the analysis which I will take up again in the next post.

But it seems an interesting observation in its own right – the triple combination of the early 2000s recession, the oil shock of the mid 2000s, and then the great recession, have combined to lower the share of auto consumption in the US economy by about a third over the last decade.

Early Warning

One Comment on "Autos in the US Economy"

  1. DC on Wed, 27th Jul 2011 4:17 pm 

    Im not exactly what his point here is. But to clear away the cobwebs, here it is in a nutshell. Amerikas attempt to maintain car-dependency and everything assoiated with it, is what is dragging down the empire now. Car dependency is an economic anvil around everyones neck, rich and poor alike. The best thing that could happen is no more cars are ever made or imported into North America. While that would desireable for too many reasons to list, there is a problem, a large one.

    There is no ‘Post-Car’ economy waiting to take over, forget any fanatisies about the interwebz leading us to a new, virtual economy, been there, done that. Whatever economic or job benefits the web is to provide, we pretty much have them now. And with a landscape totally remade to service cars and cars only, its almost totally useless for anything else and going to be hugely expensive to undo.

    We can only hope the next round of economic collapse in the US puts GM out of business for good.

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