Dollar Plunges as Fed Officials Speak

From the days of Alan Greenspan as chairman of the Fed up to today the Forex market pays close attention to what the Fed might do next. The current drama has to do with how fast or slowly the Fed will raise interest rates. They don’t want inflation to take hold and they don’t want to drive the economy backward. Thus there seems to be a steady as you go approach that is disappointment dollar bulls. For example today the dollar plunges as two Fed officials speak. Bloomberg notes that the USD is at a 15 month low and the euro is headed up.

Yields and the dollar fell after St. Louis Fed President James Bullard said he doesn’t support hiking rates further. The greenback extended its drop after Cleveland Fed President Loretta Mester added to the cautious tone by saying she’d lowered her estimate of inflation’s trigger point.

As dollar bulls search for reason to buy the greenback the euro profits from stronger GDP numbers. And meanwhile traders worry about the US debt ceiling and whether congress will mimic a circus again when time comes to raise it come September.

Will the Immigration Issue Kill the Economy?

A new social and political issue has raised its head and has application the US economy and the US dollar. Donald Trump and the Republican congress want to curb legal immigration. U.S. News writes that the economy needs immigrants.

America needs immigrants to grow and prosper, especially highly-skilled immigrants who fuel innovation and spur higher productivity gains across the economy.

Immigrants boost the nation’s economic growth rate in two important ways: by increasing the total number of workers employed, and by raising the overall productivity of workers, both immigrant and native born alike.

Without a healthy inflow of immigrants, the U.S. labor force would soon begin to decline, imposing a drag on growth while adding to the strain on our retirement programs. Annual growth of the labor force has slowed from 1.2 percent in the 1990s to 0.5 percent in the current decade. And with the number of native-born Americans of working age on a path to decline by 8 million between now and 2035, according to the Pew Research Center, we need immigrant workers and their children to maintain our economic growth into the future.

High-tech, manufacturing, agriculture and construction will be the worst hurt if immigration is reduced. Trump says that he wants to take care of those who are here first of all but people are not always willing to move to where the jobs are or train for them when available. A larger work force is a guarantee that jobs don’t go wanting for workers and that wage inflation does not take over. The economic prosperity of the 1980’s was partially caused by the largest uptick in immigration in a century. Anyone heading into retirement should want a large and young work force to help fund their social security benefits. Currently immigrants account for a sixth of the US work force but a third of workers with PhDs working in fields requiring science, technology, engineering and math skills. The article has a photo of Albert Einstein receiving his citizenship papers!