Here's a fine article from Slate.com on the economic implications of a weak U.S. dollar. Its author, Daniel Gross, points out that a weak U.S. dollar has meant an increase in tourists who visit the States to take advantage of comparatively cheap (with regard to other developed countries) goods, services, and investments (including real estate). Gross writes, "The money tourists spend helps put a dent in our chronic trade deficit. So do exports, which, thanks in part to the weak dollar, soared 11 percent between May 2006 and May 2007. For the first five months of 2007, the trade deficit actually fell 7 percent from 2006."
Gross also reminds us the weak dollar has benefited those U.S. corporations that rely heavily on foreign sales:
If you—or your mutual fund—own shares in large American corporations, you're a winner in the weak-dollar sweepstakes. Based on data culled from 238 constituents of the Standard & Poor's 500 Index, S&P analyst Howard Silverblatt concludes that the typical member of the index garnered 44.2 percent of its sales outside [emphasis mine] the United States in 2006. Translating cash received from those sales into weaker dollars puts some fizz into earnings. Last week Coca-Cola's stock bubbled to a five-year high after it reported a fantastic quarter. Foreign sales accounted for 65 percent of Coke's beverage business. Other ur-American companies profiting from this trend include McDonald's (65 percent of sales overseas) and IBM (56 percent).
So if U.S. corporations are able to produce goods that sell comparatively higher in Europe than they do in the States (again, owing to the weak dollar), then Coke and its internationally friendly ilk are not terribly troubled by the current state of the U.S. dollar.
I wonder what the implications of such overseas profitability are for domestic jobs. It's true that U.S. corporations are profiting from high sales in Europe and Canada, but I'm not sure if that necessarily translates into more jobs or better employment conditions (e.g., wages) for employees of those corporations.
One thing is for sure: there's no better time (or excuse) for all my European and South American friends to come and visit me in Durham, North Carolina -- especially Durham, where you can buy a pack of Camel Lights for under $3.50; you can buy a decent used car for under $3,000 (as I did recently); and you can order, until 3am, 7 days a week, a meal "tray" consisting of a burger, two sides, and a drink for $3.99 at our local drive-thru, Cook-Out.
Or: you can meet in Hawaii when I visit my family in December.