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Strategies & Market Trends : The Epic American Credit and Bond Bubble Laboratory -- Ignore unavailable to you. Want to Upgrade?

To: I_C_Deadpeople who wrote (88093)	10/28/2007 2:15:29 PM
From: KyrosL	Respond to of 110194

You are right that, if you include energy, commodities make up a decent part of the wholesale cost of manufactured goods. However, the final retail cost to the consumer, which is what's relevant in figuring inflation, is a multiple of the manufacturing cost. For example, it is estimated that the typical take of the Chinese supplier of goods sold in America is less than 10% of the final retail price. The other 90+% is design, branding, distribution, marketing, etc. It's the so called smiley curve from the point of view of the multinationals that brand the products. The lion's share of the revenue comes from the initial conception and design of the product (the left side of the smiley) and the final distribution and marketing of it. The middle part is the low point of the smiley where the Chinese supplier gets his cut. Finally, as you are well aware, more than 70% of the US economy is services, where commodities, other than energy, are not even in the picture.