A recent article published by The Forbes says that the U.S. dollar, not China, is to blame for the United States’ economic slowdown.
The U.S. economy sharply slowed in the fourth quarter of 2015 with a mere 0.7-percent annual growth rate. It is a significant drop compared to earlier in the year.
With exports falling, some analysts blamed the slowdown on shrinking demands in overseas markets like China and Europe.
However, according to Torsten Slok, chief international economist for Deutsche Bank, the rise of the U.S. dollar is the root cause for the sluggish economic performance.
Slok wrote an article on The Forbes, saying that if a decreasing Chinese demand was responsible, similar patterns should have appeared in Europe and Japan, as China’s demand for goods in these regions is usually heavy.
The economist says whatever the cause for the U.S. slippage, it is not hitting Europe and Japan.
Slok says the rise in the value of the dollar against other currencies is the major factor, as it makes U.S. produced goods relatively expensive, and naturally, demand for them dropped.
As to why the dollar grew strong, Slok cites increasing purchase of U.S. goods or investments, robust recovery from the Great Recession and especially, the Federal Reserve’s tightened monetary policy, as the causes.