Why a rallying dollar is good for US consumers
The dollar's steady rise to a 4-month high is directly correlated to the underlying strength of the U.S. economy, and if history is any guide that bodes well for the U.S. stock market, (^GSPC) according to Yahoo Finance Senior Columnist Michael Santoli. "In the 90s, the dollar was in a really strong mode and the economy did relatively well and of course the markets did really well."
Santoli also notes investors are flowing back into the dollar as the prospect of rising interest rates becomes more likely in the U.S., while Europe and Japan struggle to revive their economies.
As the dollar (UUP) continues to gain momentum, both the Federal Reserve and the U.S. consumer could reap a number of day-to-day benefits.
According to Santoli, expect a stronger dollar to add up to “lower oil prices, better purchasing power in general, and I do think it will staunch off inflation in a larger way, not just for oil," he said. "So, basically it can make your dollar go a little bit farther.”
Whether it's a decline in prices at the pump or a smaller heating bill this winter, getting a bigger bang for your buck is welcome news for American workers, many of whom have seen paychecks flat-line during the past year as wage growth remains unchanged.
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