Look Beyond Housing Sector for View of Economy

By October 23, 2007Economy, Trade

Irwin Stelzer, director of The Hudson Institute’s Center for Economic Studies, assesses the economy in today’s Examiner, and suggests a balanced view that acknowledges the housing downturn but also recognizes strengths — such as export-driven growth:

Exports are growing at a double-digit rate, buoying industrial output, which rose at rate of 4 percent in September.

The export boom is likely to continue. For one thing, the world economy is set to grow at the quite satisfactory rate of 4.75 percent in 2008, according to the International Monetary Fund. For another, the weak dollar is making our goods cheaper in overseas markets, and diverting Americans from expensive European hotels to Florida, California, and in some cases American cruise ships that gladly take dollars. That’s why European businesses are so upset by a $2 pound and a $1.43 euro: Their exporters are hurting.

But American exporters are smiling. So when Bush administration officials reiterate the standard position — a strong currency is in America’s interest — take it with more than the usual pinch of salt. A weaker dollar means domestic economy up, trade deficit down. And right before the 2008 elections. That’s why Paulson wouldn’t let the G-7 communiqué include a call for a stronger dollar.

Hmmm. A touchy political area, admittedly.

You know who else likes what the dollar is doing, at least vis a vis the loonie? Border-area retailers:

Terry Alexander, manager of the Sleep Inn and Suites in Minot [N.D.], is amazed at the number of Canadian visitors spending two to three days at this hotel. Visitors have been booking in non-stop since the end of June and Alexander doesn’t seen an end in sight.

“It’s been tremendous,” he said. “A good majority of them are just shopping.”

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