BPEA | 1971 No. 2

How Much of Current Unemployment Did We Import?

1971, No. 2

IN THE FIRST QUARTER OF 1970, unemployment in the United States rose to 4 percent of the labor force, the presumed full employment arget. By the first quarter of 1971, unemployment reached the undesirable level of nearly 6 percent. Overt his same one-year period, imports into the United States increased by $4 billion (1971:1 over 1970:1 at annual rates) and exports increased by only $3 billion, reducing the net positive trade balance by $1 billion. An increase of competitive imports—considered in isolation—has the direct consequence of reducing job opportunities. A reduction of exports has a similar job-destruction effect. By the same token, a reduction of imports and an increase of exports have the opposite consequence on job opportunities. In view of the trade development, a seemingly natural question is how much of current unemployment tid we import?