The Euro was $1.2944 on November 14th, and $1.2957 November 16th. Seems insignificant does it not? It is, unless the directional creep continues. It reflects the weakening Dollar against other Currencies in the World. This means that American Imports become more expensive, and American Export become cheaper--or does it? Behlen Manufacturing Group reports Steel prices have risen 80% (had to put this in, as the Author once worked for Behlen on the plant floor). The entire situation need be evaluated.
There has been a 1.7% increase in the Price Index last month, not truly reflective of Core Inflation, as it was led by unusual Food and Gas prices. Core Inflation shines through the 0.3% increase the Core Producer Price index. It grows more worrisome as Crude materials, reducting Food and Energy price increases due to their unusual (read potentially temporary) price rise, still rose by 5.4% in October. Real anxiety comes in the fact that base production requirements--Steel, Copper, Bauxite)-- have led the way with higher Prices. The weakening Dollar, which also reduces the Profitability of Off-shoring, could lead Producers to increase Prices over the spectrum of Goods; it being likely in the face of increasing American Wages.
This Author believes Economic discussion should have an end purpose, and so he is going to enter into the most dangerous area--Predictions. He estimates that the cost of American Imports will rise by 8% by the end of 2004. He further predicts that American Exports will increase in Price by 1.7% through the end of the year. He expects overall American Consumer price levels to increase by 2% by year's end. He further expects American Wage levels to increase by approx. one percent, so New Claims for Employment will not drop below 340,000 through the end of 2004. (all numbers, except predictions, came from WSJ or NYTimes.) lgl
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