This is the first in our series of mystery charts, where I give you a chart and you guess what it is. I’ll make it easy–multiple choice.
Here’s the chart:
Is this chart:
a) the real wages of production workers
b) the profits of tech companies
c) the price of imports from China (as reported by the BLS).
d) the price of homes in Illinois
Answer beneath the fold. No peeking!
Answer: c. The price of imports from China, as reported by the BLS.
Surprised? So was I. Basically, according to the BLS figures, the price index for imports from China is the same today as it was in 2003. This is a bit of a puzzle, considering that the major imports from china are information technology equipment, consumer electronics, toys, furniture, household items, and apparel–all goods which have fallen in price in the U.S. over this period, either a lot (in the case of electronics), or a little (in the case of apparel).
Moreover, it’s unlikely that Chinese imports to the U.S. would have risen so much over this period if the price of the imports had remained more or less constant.
The implication is that Chinese import prices probably dropped a lot more than this chart shows (for an explanation of biases in the import price numbers, take a look at this story.) In my next post, I will take a stab at estimating the macro implications of this statistical problem.