Here’s a quick question. The U.S. has lost 4 million private nonconstruction jobs between 2007 and 2011. The major causes of this job loss include:
A) Weak demand;
B) Strong productivity growth;
C) Rising imports.
Most economists would answer A or B. Imports have not been treated seriously as a cause of job loss during the Great Recession. The reason is simple: According to the official date, real nonpetroleum imports are barely back to their pre-recession levels. You can’t have job loss from imports if imports aren’t rising.
But two new studies from PPI show that the official data is wrong about the behavior of imports. We properly adjust for the economic impact of low-cost imports from countries such as China, and find that real nonpetroleum imports did rise from 2007 to 2011 by some $131 billion (in 2011$), instead of being basically flat.
As a result, we estimate that 1.3 million jobs have been lost to rising imports since 2007. That accounts for almost one-third of the private nonconstruction job loss between 2007 and 2011.
The two studies: