The US dollar continues to rise in value in relation to the Euro. A strong dollar makes products manufactured overseas cheaper to buy. While it may make buying a Mercedes cheaper and may make your international travel budget go further, these savings come at the expense of business revenue.
On the flipside, goods and services produced in the good old USA are more expensive in the world market, resulting in falling sales. International companies like Ford and McDonalds are feeling the pressure as they fail to meet revenue and profit projections. Investors in the big blue chip international stocks are pulling back, exerting downward pressure on the overall stock market.
With less overseas sales, businesses will have a hard time justifying their labor expenses and will need fewer workers. A greater supply of workers means employers can decrease salaries and find displaced workers to either fill vacancies or replace higher wage earning employees with cheaper ones. Lower payroll means less payroll and income tax collections.
While the government agenda for the past few years has been focused on export export export, this now has consequences to those businesses that rely more heavily on offshore revenue. Even businesses focused strictly on domestic sales are beginning to feel the pinch since their customers are recognizing that labor is cheaper to outsource and goods are cheaper to buy from offshore providers than to purchase from domestic sources. So what may look good for consumers has the inverse effect for savers and investors?
How will the effects of a strong dollar impact the different facets of your life and business?
