Catherine Mann, Columnist

Re-Made in the U.S.A.

U.S. consumers might be losing their taste for imported goods. This could have big implications for the whole world.

May 7, 2014 at 1:03 PM UTC

Catherine L. Mann is chief economist and head of the economics department for the Organization for Economic Cooperation and Development, as well as the G-20 finance deputy. She previously served on the U.S.'s Council of Economic Advisors and at the World Bank and the Federal Reserve Board.

Buying Americans. Photographer: Craig Warga/Bloomberg — Buying Americans. Photographer: Craig Warga/Bloomberg

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An odd thing is happening in the U.S. economy: Consumers appear to be losing their taste for imported goods. It's a change that, if sustained, could have big implications for global trade, the dollar and the effects of the Federal Reserve's policies.

Domestic economic activity and imports in the U.S. tend to have a predictable relationship: When the economy grows, imports tend to grow twice as fast. For consumer spending, the relationship is even more extreme. A 1 percent growth rate of consumer spending, for example, is typically associated with nearly a 3 percent growth rate of spending on imports of consumer goods. This relationship has held pretty much constant since economists Hendrik Houthakker and Stephen Magee discovered it in the 1960s.