Relative Strength Of Escalating U.S. Import Prices Is Laying The Foundation Of A Sustainable Economy

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The price of imported products are going up, a lot!

The price of imports has now increased more than 2% in consecutive months for the first time since 2008.

Imported fuel, accounting for 80% of the April 2011 gain, shot up 6.7%“…in the month of April.

What about that other 20% of imports?

Their prices are up almost 5% over the last 12 months.

The relative strength of import prices raises two questions. The first is why? The second is what does this mean to the U.S. and its potential for adopting a sustainable economy?

The answer to the first question of why is a three part answer involving commodities like oil, China and the devaluation of the U.S dollar.

Oil prices are now above $100 per barrel due to the combination of country risk volatility combined with global demand growing greater than supply.

The second part of the why answer is China which is the dominate product importer into the U.S. The global price spike in commodities from oil to copper impacts China most heavily. In addition, their their economic growth is now generating higher wage expectations among manufacturing laborers. Combined,  higher commodity costs plus higher labor costs are driving up the cost of goods imported into the U.S. from China.

The final leg of the answer is the devaluation of the U.S. dollar. The more the U.S. imports and borrows to finance these imports the more our dollar devalues against the world’s currencies.

What does this mean? We are in a vicious circle of buying too much from other countries on credit that devalues the dollar which means we then have to pay more (higher import prices) and borrow more. This is unsustainable and higher priced imports is just one of the negative feedback signals that is going to stop this unsustainable cycle.

What this means for the U.S. is that the economic door is opening wide for the adoption of a sustainable economy.

The lower cost alternative to higher oil and non-renewable energy prices is efficiency plus use of renewable energy.

The alternative to buying higher priced imported products is to Buy Local.

The ramifications of adopting these two sustainable economy best-practices are:

  1. Increase employment
  2. Stronger economy as more dollars stay within the U.S. economy
  3. Less consumer risk as more products produced in the U.S. are manufactured under strong safety regulations
  4. Lower health care costs from reduced emissions of toxin created from reduced consumption of fossil fuels.

Bill Roth is the founder of Earth 2017, a website that posts analysis and trends on the emerging $10 trillion annual revenue global smart, heathy and green economy. His book, The Secret Green Sauce, profiles best practices of businesses making money going green.

About Bill Roth

Bill Roth is the founder of Earth 2017, author of The Secret Green Sauce and a nationally-followed contributor to Entrepreneur.com, Triple Pundit, The Green Economy Post and Media Post on best business practices emerging from the smart, healthy and green global economy. He coaches entrepreneurs, business and community leaders on how to grow revenues, profits and jobs by going smart and green.
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