http://story.news.yahoo.com/news?tmpl=story&u=/dowjones/20040106/bs_dowjones/200401060922000754
So, the dollar is tanking. How does this affect me, a US consumer, in the near term? How about in the next year? Will I experience more expensive goods, etc.? Less advantageous interest rates?
Basically imported goods become more expensive while your exports become cheaper for other nations/consumers to buy. Internally produced goods cost the same unless they require imported components which would increase their cost.
I think it helps with your national debt load and trade balances, but I’ll let better qualified people answer that one.
Of course should you decide to travel to Europe this summer, you may well find things much more expensive than you had planned, and foreigners coming to the U.S. will enjoy relative bargains.
The decline in the dollar should, all other things being equal, improve the U.S. trade deficit, since Americans will buy fewer imported goods, and American firms will be able to export more goods. However, “all other things” are rarely “equal”, so there is some room for uncertainty here.
The Swedish couple I was just visiting with during their California stay were saying that they were paying about 30% off for stuff, because of the drop in the dollar. The husband bought an electric guitar to take back home, while his money was strong and his selection was wide.
My GF is fucked (UK student loans). Mind you, if I decide to visit…:D…
Expect hordes of Canadians this winter, waving their suddenly-more-valuable-(relatively) dollars while grinning like idiots in the southern sun.
Also, expect business at your exporters to pick up.
Listen carefully for the groans and wails from across your borders asnd across the sea as foreign manufacturers find themselves suddenly less competitive in your markets.
Through an odd set of circumstances no one planned for the company I work for has all of its manufacturing facilities in the US, and sells all of its product (currently) in Europe. Our CEO admitted a few months ago that this situation has worked out very much in our favor because our expenses keep getting cheaper (US dollar denominated) relative to our sales (Euro).
It is going to be very interesting to see how this larger scenario plays out long term, considering how the US has acted the part of the importer of last resort to most of the rest of the world over the last couple of decades.