American Economics
Now I have the tea thing off my chest I think its time for a bit of economics. Last time I visited NY (99) prices were by and large cheaper than the UK. The dollar stood at 1.40ish and all was merry in consumer land.
This time I felt there was a different story going on. Once sales tax has been taken into account most things are now the same price as the UK. Globalisation has solved the release date issues - DVDs are within a few weeks of the UK, and tech for sale is largely the same. American stuff like Apple is a bit easier to get hold of, but by and large the bad old days of wait for a year before it hits blighty are over.
Now analyse the dollar slide. Its moved to almost 2 dollars to the pound. Obviously most people in the States have not had a 30% payrise in the period. In fact by watching the news I got the impression most Americans were fairly oblivious to this sudden shift. A business report on CNN talked about the new generation of rich being much thriftier than the last. They defined rich as a couple earning 120,000 or more. Now back in 99 that was 90,000 pounds - enough to buy lunch as it were. Fast forward and its ~60000, which is two people earning 30000 each. In fact in the UK they would not yet be high rate tax payers, so hardly rich.
Now returning to the cost of stuff in the shops, it seems to me that there is rampant stealth inflation going on over there. After all, a new release DVD now costs 17 quid in Virgin or 32 dollars (inc tax) in Virgin NY. One has shifted a lot.
Another interesting story was a Forbes interview. The interviewer noted the number of new foreign billionaires in the list. Forbes put this down to the world embracing capitalism. At no point did they even mention the fact that most people abroad have gained 30% more dollar value - without doing a thing.
All this paints a worrying picture of American finances at the moment. This dollar slide could start hurting sooner than many think over there.
As for the rest of the world, it may mean an ultimate strengthening of other currencies, and a decline in US buying power. One thing I can see that will save America is its apparently boundless optimism. The question is will the rot set in this time, or will they just ignore conventional wisdom and hit back strong as ever?
Time will tell...
This time I felt there was a different story going on. Once sales tax has been taken into account most things are now the same price as the UK. Globalisation has solved the release date issues - DVDs are within a few weeks of the UK, and tech for sale is largely the same. American stuff like Apple is a bit easier to get hold of, but by and large the bad old days of wait for a year before it hits blighty are over.
Now analyse the dollar slide. Its moved to almost 2 dollars to the pound. Obviously most people in the States have not had a 30% payrise in the period. In fact by watching the news I got the impression most Americans were fairly oblivious to this sudden shift. A business report on CNN talked about the new generation of rich being much thriftier than the last. They defined rich as a couple earning 120,000 or more. Now back in 99 that was 90,000 pounds - enough to buy lunch as it were. Fast forward and its ~60000, which is two people earning 30000 each. In fact in the UK they would not yet be high rate tax payers, so hardly rich.
Now returning to the cost of stuff in the shops, it seems to me that there is rampant stealth inflation going on over there. After all, a new release DVD now costs 17 quid in Virgin or 32 dollars (inc tax) in Virgin NY. One has shifted a lot.
Another interesting story was a Forbes interview. The interviewer noted the number of new foreign billionaires in the list. Forbes put this down to the world embracing capitalism. At no point did they even mention the fact that most people abroad have gained 30% more dollar value - without doing a thing.
All this paints a worrying picture of American finances at the moment. This dollar slide could start hurting sooner than many think over there.
As for the rest of the world, it may mean an ultimate strengthening of other currencies, and a decline in US buying power. One thing I can see that will save America is its apparently boundless optimism. The question is will the rot set in this time, or will they just ignore conventional wisdom and hit back strong as ever?
Time will tell...
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