A Stronger US Dollar Impacts Everything
February 27, 2015

Over the last eight months the US dollar has been soaring in value against all major currencies. Right now the dollar is at a five year high against the Euro and many other foreign currencies.

This is good news for Americans traveling abroad, as the stronger dollar makes dream trips to Europe, Asia and Australia more affordable. But it puts a damper on spending habits of tourists visiting the Unites States. These visitors typically spend about $200 billion in the USA each year. We expect that the stronger dollar and foreigner reduced purchasing power will have negative consequences on the number of international tourist coming to America and the amount of money they leave behind.

Although the stronger dollar is great for American travelers and Americans, who buy imported goods, it is having a negative impact on the US export market, because US manufactured goods are becoming very expensive.

I found proof of this when I was in Bellingham, Washington last week where I visited some stores. Bellingham is only a one-hour drive from Vancouver, BC and when the dollar has been soft in the past, we see Canadians make that short trip to stock up on US goods. However, during this trip I spoke to several merchants at the Bellis Fair Mall, who reported that sales are down over 40 percent for the month from a year ago.

With the buying power of the Canadian dollar reduced by more than 20 percent over the last eight months they say that Canadians have stopped coming across the border. I saw evidence of this myself during my Sunday morning border crossing as line of cars waiting to enter the US was a lot shorter than I have seen in many years.

That said, it is interesting to note that even with a much stronger dollar, prices of comparable US consumer goods and services are still lower than those charged by competitors like Germany, Italy, France and the United Kingdom.

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Mike Lathingee

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