Stronger US$, Lower Commodity Prices Have Negative Consequences.

US Trade Deficit (August 2015)

– Trade Deficit  $48.3 billion. Previous was $41.8.

While part of this is a one time thing about imports of the new iPhone the larger concern is about declining exports.  Declining exports are a consequence of a weakening economy in the EU and slower growth in China. Add to that a stronger US $ which make our exports more expensive to foreign buyers.

The most important thing for the  world economy at this time is the sharp decline in commodity prices.  This has very serious social and political consequences for many nations.

The stronger US$ is the largest reason why it is best for the Federal Reserve to not attempt to raise rates.  Raising rates will strengthen the US$ and worsen the problem for EU Nations, China and emerging nations.  While the Fed’s stated mandate is not to worry about the economy of the rest of the world the fact is that a stronger US$ and lower commodity prices would likely have worse consequences for US employment and GDP than keeping rates low.

 
Redbook Chain Store Sales (week ended 10/3/2015)

– Store Sales year/year +0.7%. Previous was +0.9%.

Chain Store Sales are presently less a surrogate for retail as on-line sales increase and make it difficult for the chain stores in malls business model to remain healthy and survive.