The strong dollar — at its peak point in years — is welcomed by many as a sign of America’s improving economic conditions. But the dollar’s strength comes with consequences. American manufacturers abroad may lose their competitive advantage with products that are now too costly. Demand for American products could decrease, and exports overall could suffer.
Many people like a strong dollar because it means there’s faith in the United States, but it also undermines us. We have to be careful of what we wish for.
Another potential threat for the United States economy is the overall weakness in the world economy. Europe’s economy is motionless, China’s is decelerating and Japan’s is struggling to come out from a recent slump.
Basically, there’s a risk we could see slower job growth if much of the global economy goes into recession. It’s improbable, but there’s a chance.
Federal Reserve officials noted Europe’s, China and Japan’s economy weakness in a meeting this week, but they were generally optimistic about the American economy. Still, there was worry that the global economy could affect growth in the United States and a number of experts are urging it to move carefully.
Let’s hope that the good economic news doesn’t prompt the Federal Reserve to raise interest rates any time soon. Trying to slowdown the economy too soon could have a disastrous impact.