Three USA Misconceptions, Non Political

Sometimes one's conceptions get in the way of the facts. Here is a good example of three of them:

1. Most everything we buy is made in China
2. China has become our banker, holding most of our debt
3. We are mostly dependent on Middle East oil

Here are the facts.

 At a conference in  Philadelphia earlier this month, a Wharton professor noted  that one of the country's biggest economic problems is a  tsunami of misinformation. You can't have a rational debate  when facts are so easily supplanted by overreaching  statements, broad generalizations, and misconceptions. And if  you can't have a rational debate, how does anything important  get done? As author  William Feather once advised, "Beware of the person who can't be bothered by  details." There seems to be no  shortage of those people  lately.
Here are three  misconceptions that need to be put to  rest.
Misconception  1)
Most of what Americans  spend their money on is made in China  .
Fact: Just 2.7% of  personal consumption expenditures go to Chinese-made goods and  services. 88.5% of U.S. consumer spending is on American-made goods and  services.
I used that statistic  in an article last week, and the response from readers was  overwhelming: Hogwash. People just didn't believe  it.
The figure comes from a  Federal Reserve report. You can read it   here.
A common rebuttal I got  was, "How can it only be 2.7% when almost everything in  Wal-Mart  (NYSE:  WMT   )  is made in  China ?" Because Wal-Mart's $260 billion in U.S. revenue isn't  exactly reflective of America 's $14.5 trillion economy.  Wal-Mart might sell a broad range of knickknacks, many of  which are made in China, but the vast majority of what  Americans spend their money on is not  knickknacks.
The Bureau of Labor  Statistics closely tracks how an average American spends their  money in an annual report called the Consumer Expenditure  Survey. In 2010, the average American spent 34% of their  income on housing, 13% on food, 11% on insurance and pensions,  7% on health care, and 2% on education. Those categories alone  make up nearly 70% of total spending, and are comprised almost  entirely of American-made goods and services (only 7% of food  is imported, according to the  USDA).
Even when looking at  physical goods alone, Chinese imports still account for just a  small fraction of U.S. spending. Just 6.4% of nondurable goods  -- things like food, clothing and toys -- purchased in the  U.S. are made in China ; 76.2% are made in America . For  durable goods -- things like cars and furniture -- 12% are  made in China ; 66.6% are made in America  .
Another way to grasp  the value of Chinese-made goods is to look at imports. The  U.S. is on track to  import $340 billion worth of goods  from China this year, which is 2.3% of our $14.5 trillion  economy. Is that a lot? Yes. Is it most of what we spend our  money on? Not by a long  shot.
Part of the  misconception is likely driven by the notion that America 's  manufacturing base has been in steep decline. The truth,  surprising to many, is that real manufacturing output  today  is near an all-time high. What's dropped  precipitously in recent decades is manufacturing employment.  Technology and automation has allowed American manufacturers  to build more stuff with far fewer workers than in the past.  One good example: In 1950, a U.S. Steel  (NYSE:   X   )  plant in Gary , Ind. , produced 6  million tons of steel with 30,000 workers. Today, it produces  7.5 million tons with 5,000 workers. Output has gone up;  employment has dropped like a  rock.

Misconception  2):
We owe most of our debt  to China .
Fact: China owns 7.8%  of U.S. government debt  outstanding.
As of August,  China   owned $1.14 trillion of Treasuries.  Government debt stood at $14.6 trillion that month. That's  7.8%.
Who owns the rest? The  largest holder of U.S. debt is the federal government itself.  Various government trust funds like the Social Security trust  fund own about $4.4 trillion worth of Treasury securities. The  Federal Reserve owns another $1.6 trillion. Both are unique  owners: Interest paid on debt held by federal trust funds is  used to cover a portion of federal spending, and the vast  majority of interest earned by the Federal Reserve is   remitted back to the U.S.  Treasury.
The rest of our debt is  owned by state and local governments ($700 billion), private  domestic investors ($3.1 trillion), and other non-Chinese  foreign investors ($3.5  trillion).
Does China own a lot of  our debt? Yes, but it's a qualified yes. Of all Treasury debt  held by foreigners, China is indeed the largest owner ($1.14  trillion), followed by Japan ($937 billion) and the U.K. ($397  billion).
Right there, you can  see that Japan and the U.K. combined own more U.S. debt than  China . Now, how many times have you heard someone say that we  borrow an inordinate amount of money from Japan and the U.K. ?  I never have. But how often do you hear some version of the "  China is our banker" line? Too often, I'd  say.

Misconception  3):
We get most of our oil  from the Middle East  .
Fact: Just 9.2% of oil  consumed in the U.S. comes from the Middle East  .
According the U.S.  Energy Information Administration, the U.S. consumes 19.2  million barrels of petroleum products per day. Of that amount,  a net 49%  is produced domestically. The rest is  imported.
Where is it imported  from? Only a small fraction comes from the Middle East , and  that fraction has been declining in recent years. So far this  year, imports from the Persian Gulf region -- which includes  Bahrain, Iran, Iraq, Kuwait, Qatar, Saudi Arabia, and the  United Arab Emirates --  have made up 9.2% of total  petroleum supplied to the U.S. In 2001, that number was  14.1%.
The U.S. imports more  than twice as much petroleum from Canada and Mexico than it  does from the Middle East . Add in the share produced  domestically, and the majority of petroleum consumed in the  U.S. comes from North America  .
This isn't to belittle  our energy situation. The nation still relies on imports for  about half of its oil. That's bad. But should the Middle East  get the attention it does when we talk about oil reliance? In  terms of security and geopolitical stability, perhaps. In  terms of volume, probably  not.

A roomful of  skeptics
"People will generally  accept facts as truth only if the facts agree with what they  already believe," said Andy Rooney. Do these numbers fit with  what you already believed? No hard feelings if they  don't