The Global Strength Of The Super Dollar

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The almighty dollar. It is at big highs right now against currencies all over the world. We’ll look at why, and what it means for the US economy.

A man looks at an exchange rate board in Paris, Friday, March 6, 2015. The euro could soon be doing something it's only done a couple of times in its 16-year existence, trading 1-to-1 with the dollar.  (A)
A man looks at an exchange rate board in Paris, Friday, March 6, 2015. The euro could soon be doing something it's only done a couple of times in its 16-year existence, trading 1-to-1 with the dollar. (AP)

The US dollar wavered a little yesterday, on anticipation that the Fed may lean toward a tiny bump in American interest rates. But overall, the dollar has been on a big rocket ride for the last nine months.  Up 24 percent against major currencies.  More against the euro.  If you’ve got a European vacation planned, lucky you. A backpack and a stack of dollars will get you a lot further this summer. If you’re an American exporter, good luck. Your goods now cost more abroad. And theirs are cheaper here. And that’s just the beginning. This hour On Point: we’re looking at life in the year of the super dollar.
-- Tom Ashbrook


Greg Ip, chief economics commentator for The Wall Street Journal. Author of "The Little Book Of Economics." (@greg_ip)

Chad Moutray, chief economist at the National Associate of Manufacturers. Former chief economist and director of economic research at the US Small Business Administration's office of advocacy. (@chadmoutray)

Jay Shambaugh, professor of economics and international affairs and director of the Institute for International Economic Policy at the George Washington University.

Anusha Chari, economics professor at the University of North Carolina at Chapel Hill.

From Tom’s Reading List

Bloomberg Businessweek: What the Strongest U.S. Dollar in a Decade Means for Your Wallet — "The 24 percent surge in the currency since June will take time to gradually ripple through the world’s largest economy, first showing up in lower costs for goods imported by American companies and then in the prices paid by consumers, according to economists at Barclays Plc, Goldman Sachs Group Inc. and JPMorgan Chase & Co. That means the dollar will be the next check on inflation, replacing oil as fuel costs stabilize."

Slate: The Crashing Euro Is Great for American Tourists. But What About the American Economy? — "A strong dollar can be both a blessing and a curse for the U.S. economy. On the one hand, it means cheaper imports, which consumers love. Families will save money on clothes, cars, electronics, coffee, some really delicious cheese, and all sorts of other staples. On the other hand, a supercharged currency will make it harder for us to sell our own goods abroad. While exports aren't quite as crucial to our economy as they are to Europe's, for instance, they're still important. As they fall, it could cut into job growth."
The Wall Street Journal: Economists See Dollar Strength, Global Weakness Restraining U.S. Growth — "The surging dollar and a global slowdown are likely to restrain the U.S. economy through at least the first half of the year, according to The Wall Street Journal’s March survey of economic forecasters. Harsh winter weather is already slowing output in the current quarter. But even once that drag melts away, a wider trade gap will remain a headwind, the economists said. That could keep overall economic growth just below 3% in 2015."

 Strong US Dollar, Cheap Foreign Travel

Anne Banas, executive editor of (@annebanas)

Forbes: Strong Dollar Makes For Inexpensive International Travel This Winter — "For the time being, American consumers seem to be getting the best end of the bargain. And there may be more ground to cover. While both the Euro and the British Pound have fallen against the dollar in the last year, both remain relatively healthy and with favorable exchange rates."

This program aired on March 17, 2015.


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