Chart of the Week: Is this the Biggest Threat to the US Economy?

Dollar

The surge of the US dollar is beginning to be crowned by some as the biggest threat to the economic recovery.  Although the rise is significant, this chart shows that the US Dollar Index is essentially in line with the 20 year average. There is a fear that the worst is yet to come and that when monetary policy begins to tighten, the surge can reach unprecedented levels. However, it is possible that since the rate hike is so highly anticipated to occur sometime this year, it is already priced in to the dollar. For now, the stronger dollar should be seen as a vote of confidence in the US economy, but if it does not slow its current trend it can be harmful to an already sluggish recovery.

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