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Connecting the dollar''s dots reveals a scary picture.

Article Excerpt
What the U.S. dollar is worth--or is not worth--in different parts of the globe is arguably the most threatening, yet opportune, dynamic in American business today.

Though I am not an economist or currency trader, l have been able to connect the dots between a number of experts to reveal a picture that is far from pretty. Our customers are leaving the United States in droves for other parts of the globe, creating a progressively shrinking, increasingly competitive marketplace. Why? Because the strong dollar is putting American manufacturers at a huge disadvantage.

The Real Dollar Index has risen by more than 50 percent since 1995. Manufacturing profits have fallen by more than 49 percent since the dollar began its surge--a full four years before recession hit the U.S. economy.

U.S. manufacturing profits at the end of 2002 were nearly $100 billion lower than in the second quarter of 1995 as a result of the dollar's appreciation.

Not coincidentally, when you compare the "stable" dollar years of 1991 through 1996, to the "strong" dollar years of 1997 through the present, the damage is undeniable. (See graphic on page 5.) The trade deficit ballooned from $176 billion to $468 billion because we are exporting far fewer goods and services. In Fact, U.S. manufacturing exports today are actually lower than in 1997.

A strong dollar artificially raises the cost of U.S. exports to most countries by more than 30 percent, while providing imports to the U.S. market with an artificial 30 percent price advantage.

Instead of adding over 400,000 jobs like we did when the dollar was stable, the cumulative U.S. manufacturing job loss over the past 36 months now exceeds 2.7 million. More than one in every 10 American factory jobs has disappeared in a little more than two years.

Manufacturing employs 14 percent of the U.S. workforce. Yet since overall employment peaked in August 2000, 90 percent of all the lost jobs came from the manufacturing sector. The rest of the economy--86 percent of the U.S. workforce--has experienced only 10 percent of the job losses.

Some very smart economists think it's acceptable for low-skilled American jobs to move offshore. In their considered opinion, what America really wants for its people are high-technology, high skill jobs. The U.S. has lost its trade advantage in high technology, too, however, as we export less of our "intellectual property" and import more of someone else's. Since 1997, the U.S. balance of trade in advanced technology goods has fallen by more than $40 billion. Last year, this bell-wether sector went into deficit for the first time in U.S. history,...

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