Ping!
“A key reason”
The key-est — how the govt. calculates inflation.
The dollar has been strengthening since last week’s low inflation data. This article is already outdated.
Hey what inflation? Fed says it’s under control.
The greenback didn't drop 10% against the ChiCom yawn or the Japanese yen. Lots of imports from those guys.
yitbos
The dollar hasn't done a lot of plunging lately.
When the Canadian dollar was known as the northern Peso, some things were priced lower in Canada (allowing for exchange rates) than in the U.S. Some cars were 25% cheaper in Canada than the U.S. The only way this price differential held up, was because car companies enforced it through their dealership franchise system. Canadian dealers were not allowed to sell cars to Americans.
Items, such as computers, that could be gotten from multiple sources, were priced roughly the same on either side of the border (again, allowing for exchange rates).
Those must have been the bells that predicted all seven of the last two inflationary epochs America's seen. Your graph tells it all. The plunging dollar does not affect inflation, and it does not affect the trade deficit. Sam Goldwyn understood the situation well with his famous "Nobody knows nothin'!!"
I read an FT article (op-ed?) where the writer observed that a weaker dollar increased gulf oil state receipts, a portion of which are placed in US government debt. When gulf states purchase more US government debt, this has the effect of reducing the interest yield of such debt. As a result of this dynamic, a weakening dollar works (ceteris paribus) to reduce the interest rates paid on US government debt.