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Bob Moon: Never mind fears that it might hurt as much as help economic stability, the European Central Bank went ahead and notched up interest rates today.
A rise in European interest rates boosts the value of the euro and attracts foreign investment. But on this side of the pond, the strong euro makes the dollar weaker.
The fall of the greenback, on the other hand, isn’t all bad news here at home. As Jeremy Hobson reports, it’s also helping some well-positioned winners.
Jeremy Hobson: Under President Bush, the dollar has lost 40 percent of its value against the euro.
To get a sense of the effect that’s having on U.S. trade, I’ve come to Oakland, California, home to the fifth busiest port in the country. Port spokesperson Marilyn Sandifur has a front row seat to U.S. trade.
Marilyn Sandifur: And we’ve seen a 12 percent increase in exports at the port of Oakland in the first four months of this year compared to the first four months of 2007.
Imports, on the other hand, have remained flat. That’s the typical outcome when the dollar falls. Exports rise because it’s cheaper for foreigners to buy U.S. goods. Imports drop because we can’t afford theirs. On the other side of the bay, there’s a port of a different sort.
Hobson: Hi, Ricky.
Ricky Serbin: Hey, come on in.
At his house in San Francisco, Ricky Serbin sells thousands of dollars worth of clothes each day on eBay to buyers around the world.
Serbin: So my business is extremely high-end designer fashion.
Hobson: Has the weakening dollar been good for your business?
Serbin: I had a record month last month, so I can only assume yes.
Hobson: So, when people start talking about how we should try to strengthen the dollar, your answer would probably be, “No, leave it alone?”
Serbin: No. I want to travel to Europe to buy. This is the first year in five years I haven’t traveled to Europe to go on a buying trip. And my dollar’s so weak, I’m dependent on what I can get in the U.S. right now.
It’s the same story back at the port of Oakland. Exports may be up, but Marilyn Sandifur says the 28,000 jobs the port supports are in jeopardy when imports slide. For instance, if imports are down, some of those truckers who usually haul shipping containers into the nation’s interior sit idle instead.
Sandifur: What we would like to see certainly is a balance in trade. I think that’s good for everyone, and we’d like to see this dollar regain some of its strength and see, you know, a 50-50 balance in terms of imports and exports. That’s really good for the country and good for all of us.
The men hoping to occupy the White House next both say they want to strengthen the dollar. Barack Obama says the way to do it is to balance the budget and grow the economy. John McCain says reducing government spending will help, and he says we have to “talk up the dollar” in the short term.
But Catherine Mann, a trade policy expert at Brandeis University, says don’t forget about the flip side of the coin: Those high exports mean business for U.S. companies.
Catherine Mann: It’s absolutely the case that the dollar depreciation is softening the magnitude of the economic slowdown that we’re experiencing today.
And if history is any guide, the size of the slowdown will be key in determining which of the presidential candidates has the best shot at getting his face on a dollar bill one day.
In San Francisco, I’m Jeremy Hobson for Marketplace.
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