WASHINGTON — Americans shopping in Wal-Mart or Macy's or just about any store find themselves in a sea of foreign-made clothing and accessories.
These imports are no longer considered cheaper or inferior in quality to merchandise manufactured in the U.S. — the prevailing belief 20 or so years ago — and now represent more than 90 percent of apparel sold at retail.
The consumer's full acceptance of products made abroad has put aside protectionist sentiment or the feeling that "Made in the USA" is better. However, combined with the penchant for buying on credit, this evolutionary shift in sourcing and buying habits has changed the country's economic profile, resulting in potentially serious consequences for the U.S. and the global economy.
"We're increasingly the customer of first, last and middle resort," said Charles McMillion, president and chief economist at MBG Information Services. "We are a driver for the economies of most of the countries in the world outside of the U.S."
This has led to an imbalance in the global economy.
"The rest of the world is producing about $2 billion a day more in goods and services than they themselves are consuming," said McMillion. "That adds to their economic growth, adds to their job growth and adds to their tax receipts."
But the U.S. loses out in all those areas, he said.
The U.S. had a current account deficit with the world of $726 billion last year. That means, basically, that the U.S. bought more from other countries than it sold to them, to the tune of about 6 percent of gross domestic product.
Many see the deficit as a function of a low savings rate in the U.S. and high savings rates abroad. The Chinese, for instance, tend to save a lot of their earnings, since they don't have a strong social safety net to turn to in times of trouble.
Others see the imbalance more as a result of unfair trading practices in other countries, such as an undervalued currency in China, which wracked up a record deficit of $202 billion with the U.S. last year, and poor labor conditions in many Third World countries.Regardless of the cause, the deficit creates an unusual situation. Other countries take the extra dollars they hold and invest them in U.S. Treasury bonds or other assets. In effect, that means much poorer countries like China are lending the U.S. money, and the U.S. uses the funds to buy more goods and services on the global market.
"The great risk is that there's no fundamental reason why all these things need to continue," said Peter Rodriguez, professor of economics at the University of Virginia's Darden School of Business.
"It is possible to see a quick reversal or backslide, and that's why we worry about imbalances. Suppose one day China has a real change of heart with its appetite for our investments. That does portend at least meaningful swings in currency values and a spike in the U.S. interest rates."
Given the size of the current deficit, he said, "we're in uncharted waters."
Robert Kennedy, executive director of the William Davidson Institute at the University of Michigan, pointed out, however, that the current account deficit has a corresponding capital account surplus that also brings benefits with it.
"The fact that we have a capital account surplus means interest rates are lower than they would be otherwise and asset prices are higher than they would be otherwise," he said.
Kennedy said the deficit will sort itself out.
"It's a self-correcting process," he said. "One of two things is going to happen: Either the dollar's going to get weaker ... or Americans at some point are going to start saving more."
In his new book “Hollywood Royale,” Andy Warhol’s Protégé Matthew Rolston celebrates the Eighties revival of Hollywood glamour. Featuring more than 100 portraits taken by Rolston from 1977 to 1993, the book contains photos of icons like Michael Jackson, Cyndi Lauper, and @drewbarrymore, pictured here in 1991. “Hollywood Royale,” out today, will be accompanied by an exhibition opening at Los Angeles’ Fahey/Klein Gallery on March 1. #wwdeye
"Nowadays when life is not so happy with everything going on in the world, I think people come to me for a little bit of whimsy and color and fun." - Designer Rebecca De Ravenel on her cult-favorite jewelry line. (📸 : @vsteves) #wwd40
“Everyone is talking about how the retail industry is struggling, but I think it’s an incredible time because brands who are doing something different and innovative are setting themselves up for the future,” said @adamgoldston, who founded the luxury athletic brand @apl with his brother @ryangoldsten. The Goldston’s are part of WWD’s 40 under 40: a group of industry notables. See the rest of the list on WWD.com. (📷: @vsteves) #wwd40
@eyeswoon blogger Athena Calderone debuted her first-ever cookbook, “Cook Beautiful,” which is heavily centered on the presentation and visual expression of food. Pictured here are her miso glazed carrots from the book. Get the recipe on WWD.com. (📷: @johnny_miller_) #wwdeye
“It’s passion that helps get anybody to a certain point and it’s what’s propelled me,” said Kith founder @ronniefieg, one of WWD’s 40 under 40: a group of industry notables who are changing the face of retail, fashion and beauty. Fieg, who opened a Manhattan flagship on October 7, began his career at age 13 as a stock boy and salesman for footwear chain David Z. “I think staying true to [my] beliefs, hard work and passion have gotten me to where [Kith] is today.” See the rest of the 40 at WWD.com. (📷: @vsteves) #wwd40
25-year-old @samweaving is about to break out this fall, starring in Netflix’s horror film “The Babysitter,” fittingly out today on Friday the 13th. That’s not the only place you’ll be seeing her, though — Weaving’s got a role Showtime’s “SMILF” and another alongside Frances McDormand and Woody Harrelson in “Three Billboards Outside Ebbing, Missouri.” Though she’s got a full plate at the moment, there’s one role she’s got her eye on: Marilyn Monroe. “I’m a little too young at the moment, but it’s on my bucket list,” the actress told WWD (📷: @dandoperalski) #wwdeye
BFF's Poppy Jamie and Suki Waterhouse celebrated the launch of their bag line Pop x Suki at Nordstrom last night. "The line is really about our friendship, and how we are so different but complement each other," said Waterhouse. 👯 (📷: Katie Jones) #wwdeye
After designing the new @louisvuitton and @bulgariofficial flagships and a @chanelofficial boutique opening in Japan, @petermarinoarchitect has another project on his plate: The Lobster Club. Located in the Seagram Building, it’s the famed architect’s first restaurant project in New York, serving up modern Japanese brasserie-style cuisine. Bronze hues, bespoke material detailing, blush and chartreuse tones and a heavy emphasis on Picasso can be seen throughout. Mark your calendars for Nov. 1 for the much-anticipated opening. (📷: @clint_spaulding) #wwdeye
Did you know: @carlychaikin of "Mr. Robot" has been painting for about a decade? The actress, who plays Darlene on the show, is a self-taught artist who lists Salvador Dalí and Chuck Close as some of her idols. Chaikin told WWD that painting is a form of meditation for her — A much-needed one given the intensity of "Mr. Robot." See a piece Chaikin is working on at WWD.com (📷: @jilliansollazzo) #wwdeye