US Exports Hammered, Renewed Pressure on Fed to Smash Dollar

WASHINGTON – Orders for durable goods from US manufacturing fell unexpectedly for the third month out of last four, the latest numbers for February show. Analysts had predicted a positive, albeit weaker number than January’s 2% growth, but instead there was a sharp decline of 1.4%.

As in years past, some attempt to blame January’s bad weather.

"The severe weather likely played at least some role in this, but the trend clearly has turned down since last summer," said Ian Shepherdson, chief economist at Pantheon Macroeconomics.

More are blaming low energy prices. With crippled revenue, many oil and energy companies are delaying any and all purchases that are not absolutely time critical.

The main culprit, however, could be the strong US dollar due to inflationary policies and easing of other currencies by foreign central banks. The European Central Bank’s bond buying program is kicking in and holding the Euro down. Other central banks engaged in various easing programs and rate cuts include Sweden, Switzerland, India, Egypt, Peru, Turkey, Canada, Singapore, Russia, Australia, China, Indonesia and South Korea.

Meanwhile, the US Federal Reserve has ceased its quantitative easing program and is discussing rate increases, which has a strengthening effect on the dollar. While this is positive for American savers and consumers, it hobbles US manufacturers, making their goods more expensive on the global market relative to those sold under weaker currencies.

Dollar strength and a weakened manufacturing sector is creating renewed pressure on the Federal Reserve to backtrack on talk of rate hikes and revert again to easing in efforts to dampen the strength of the dollar.