Sunday, December 11, 2016

Strong Headwinds for Trump's Manufacturing Plans

It will be interesting to see how a strong dollar hurts manufacturing - - and Trump's reaction.  From the current issue of Bloomberg Businessweek:

"Donald Trump has vowed to bring back manufacturing jobs, but the dollar's rise since the election will make U.S. manufactured goods less competitive in world markets.  Here's how: (1.) A 10% move in the value of the dollar changes the inflation-adjusted trade deficit by about 1% of gross domestic product. (2.) The Dollar Index is up about 4 percent since the election, so that's a hit of 0.4% of GDP, or about $75 billion. (3.) The U.S. loses about $5,300 jobs for every $1 billion added to the trade gap. (4.) That means the dollar's rally could cost the U.S. about 400,000 jobs over the next two or three years in the part of the economy exposed to trade.  More than half those jobs are in manufacturing."

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