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Does a Strong U.S. Dollar Hurt or Help the Global Economy?  

Explore how a strong US dollar affects struggling economies, commodity exporters, multinational companies, capital outflows, and foreign investments. Consider the outlook for the global economy, inflation, and interest rates.

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Does a Strong U.S. Dollar Hurt or Help the Global Economy?  

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  1. Does a Strong U.S. Dollar Hurt or Help the Global Economy?   By: Jennie Remmel, Amir Kaloti, Jesse mancuso

  2. Current Exchange Rates

  3. Why has the dollar been improving?  • U.S. economy has been strengthening • Our trade balance has improved  • Still at a trade deficit, but hasn’t hurt our economy  • Gap between interest rates in the U.S. versus other countries • Fed wants to raise interest rates if economy continues to improve • Other countries want to keep interest rates low  • March unemployment rate 4.5% • Full employment

  4. Current State of the U.S. Economy GDP: 3rd quarter 2016: 3.5%          4th quarter 2016: 2.1%

  5. What does a strong dollar mean for the global economy?  • Hurts struggling economies with high debt denominated in dollars • Helps heavy commodity users (China), hurts commodity exporters (Brazil)  • Cheaper to invest overseas leading to an increase in capital outflows from the US • Higher prices for US multinational companies, which in turn lower profits • Foreign investments into the US may increase

  6. Looking Ahead  • Uncertainty due to geopolitical factors  • U.S. policy change, European elections, Brexit transition  • The International Monetary Fund (IMF) has projected the global economy to grow by 3.6% in 2017 • Global inflation is projected to rise 4.7% in 2017 • Federal reserve shrinking it's bond portfolio  • Higher interest rate

  7. Questions: 1. Do you believe the dollar will continue to grow? 2. Based on the information given, does a strong U.S. dollar help or hurt the global economy?  3. Do think having a strong dollar and weak global economy could lead to a possible recession? 

  8. Sources • http://www.focus-economics.com/countries/united-states • http://www.xe.com/ • https://www.americanactionforum.org/insight/trade-deficit-not-hurting-economy/ • http://www.reuters.com/article/us-usa-stocks-weekahead-idUSKBN1792W8 • https://www.bea.gov/newsreleases/glance.htm • http://www.focus-economics.com/regions/major-economies

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