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How Much Have Consumers Spent on Imports during the Pandemic?

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Abstract

The return of U.S. real GDP to its pre-pandemic level in the second quarter of this year was driven by consumer spending on goods. Such spending was well above its pre-pandemic path, while spending on services was well below. Despite the surge in goods spending, domestic manufacturing has increased only modestly, leaving most of the increase in demand being filled by imports. While higher imports have been a drag on growth, the size of this drag has been moderated by the value created by the domestic transportation, wholesale, and retail sectors in selling these goods. Going forward, a rebalancing of consumer spending toward services could give a lift to growth, by shifting demand toward purchases with little import content.

Suggested Citation

  • Matthew Higgins & Thomas Klitgaard, 2021. "How Much Have Consumers Spent on Imports during the Pandemic?," Liberty Street Economics 20211022, Federal Reserve Bank of New York.
    • Handle: RePEc:fip:fednls:93270
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    File URL: https://libertystreeteconomics.newyorkfed.org/2021/10/how-much-have-consumers-spent-on-imports-during-the-pandemic/
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    More about this item

    Keywords

    consumer spending; goods; services; Gross National Product; GDP; imports; pandemic; COVID-19;
    All these keywords.

    JEL classification:

    • E2 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment
    • F00 - International Economics - - General - - - General

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