Why your overseas vacation is bad news for the economy

Summary

This report revisits some classic implications of a strong dollar on various sectors of the U.S. economy with an eye toward shining a light on an under-appreciated trade factor: foreign travel.

Have Dollar, will travel

When we think about international trade, tangible products like steel, chocolate and coffee often come to mind first. The intuition makes sense, especially given that merchandise goods comprise roughly three-quarters of total U.S. trade, with services representing the remainder. The service sector's relatively small share of trade has meant that this category of the U.S. trade balance is often overlooked. Yet no matter the type of product, changes in the dollar's exchange rate are consequential for the path of net exports and headline economic growth. In this report, we revisit some of the classic implications of a strong dollar and shine a light on an under-appreciated trade factor: travel services.

Download the Full Report!