Deflation: when it's good, it's very good
By Maxine Shapiro, KERA 90.1 business commentator
Dallas, TX – The dollar goes down - that's bad. The dollar goes down - that's good. I feel like I'm part of this large vaudeville audience that needs a sign telling me when to applaud and when to boo. I'm Maxine Shapiro with KERA Marketplace Midday.
It wasn't too hard for me to grasp the idea - a strong dollar is a healthy dollar. My views are not one of an economist, but of a consumer. Very simply, when I did my trip abroad a couple of years ago, things were cheaper. The dollar went further. At home, my favorite imports were reasonably priced.
Then a few months ago, the dollar began its spiral down. This caused anxiety among economists. Why, just think back to Treasury Secretary Snow's predecessor, Paul O'Neill, and one of the reasons he resigned: he did not support the President's view on a strong dollar. "Let it fall where it may," I believe, was his vision that caused much displeasure in the administration.
But today, I can't read an article about the dollar without it praising the value of its current lack of value. Singing a new tune, John Snow declared on the round of Sunday talk shows that the lower dollar "helps exports and I think, exports are getting stronger as a result." And this Treasury Secretary was speaking for the administration. The currency markets couldn't wait to open on Monday, taking the dollar down to four-year lows against the Euro. One Euro costs $1.15. Last summer, the dollar was par to the Euro.
So if the dollar continues to stay weak, it will definitely make it more attractive for foreign countries to buy our goods. That helps manufacturing. The European travel industry is also seeing a little boost in traffic to America - mostly Florida and the Caribbean islands, where the dollar is accepted. The Dow Jones Newswire was kind enough to figure out that a $165, three-day ticket to Disney World would now only run about 143 Euros. And a $2.50 Starbuck's latte is now $2.17.
Sounds like I should applaud rather than boo...
For KERA Marketplace Midday, I'm Maxine Shapiro.
Marketplace Midday Reports air on KERA 90.1 Monday - Friday at 1:04 p.m.
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