After the Commerce Department released their assessment of the US Economy, the markets were not pleased. The data revealed that America’s GDP has only grown at a 0.2% annual rate. Both American and European stock markets dipped, with the Dow Jones industrial average dropping 49.78 points, and Nasdaq losing 19.71 points. What was even more shocking was the sudden drop in the value of the US dollar, which fell to 9-week lows.
This marks the second biggest drop in 6 years, and the worst decline since the dollar began its meteoric rise in 2014. Despite this, recent polls show that American confidence in the economy is remaining stable. However, it’s hard to say how long the media can maintain this level of optimism if this trend continues. As Zero Hedge put it, “This poses a problem for talking-heads: if USD strength is indicative of US economic strength… what does a plunging USD imply?”
Furthermore, we should ask ourselves if this is the first sign of the dollar’s long-awaited collapse. So far the only reason why the dollar has increased in value, is because every other economy was in slightly worse shape. If the US economy enters another recession (which it looks like it might be ready to) we may see a major exodus from the currency. Compounding matters, is China’s recent founding of a new international bank, which threatens to derail the dollar as the world’s reserve currency. We may be witnessing the end of the dollar’s last rally.
Written by Joshua Krause
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