The media is full of stories about how the soaring dollar will benefit Americans traveling overseas or purchasing foreign products.
For tourists, the dollar now converts into more foreign currency, and for consumers the stronger greenback makes foreign goods cheaper in dollar terms.
But not so fast, says New York Times columnist James Stewart
"Nothing is simple when it comes to foreign currency fluctuations and their impact on consumer prices," he writes. In a trip to Europe recently, he found that "there were indeed some remarkable bargains, but not across the board and not on some of the most expensive items."
Supply and demand determine prices, of course. "Firms set different prices in different markets simply because of differences in demand," Antonio Rodriguez-Lopez, a professor of economics at the University of California, Irvine, tells Stewart.
Foreigners visiting Europe represent a market of their own. "To the extent that the weak euro increases demand from travelers spending dollars, sellers who cater to that market can quickly adjust prices, even if those prices are quoted in euros and the products are sold in Europe," Stewart points out.
The euro plunged to 12-year low of $1.0463 March 13 and many experts think it will drop below $1.
Meanwhile, Tom Hutchinson
, senior editor of the Newsmax newsletter "The High Income Factor," told Newsmax TV
that the dollar's ascent isn't a testament to strength in the U.S. economy.
Economic growth slipped to 2.2 percent in the fourth quarter from 5 percent in the third quarter, and many economists predict mediocre growth in the first quarter too.
"It's not that we're so good, it's just that everybody else is so bad," Hutchinson, a member of the Newsmax Financial Braintrust, tells Newsmax TV's "America's Forum," explaining the dollar's strength.
"This [U.S.] recovery has been pretty anemic," he said. GDP has grown a bit more than 2 percent a year since the recession ended in 2009.
But, "if you look at Europe and Japan, we're doing great," Hutchinson said. The eurozone economy grew only 0.9 percent in 2014, and Japan's economy shrank in two of the year's four quarters.
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