NEW YORK (AP) – Americans hoping to save on European goods thanks to a falling euro shouldn’t rush to uncork that bottle of French Bordeaux. There’s very little to celebrate.
Not since August 2003 has the euro traded this low against the dollar. Still, German sports cars, Belgian beers and the latest fashions out of Italy aren’t going on sale anytime soon. The reason? There’s simply too much demand in the U.S. for any markdowns.
“The U.S. economy is the one that’s doing well in the world right now,” notes IHS senior principal economist George Magliano. “We’ve got a lot of growth in upper-income families and households.”
Since Americans are willing – and able – to spend heavily on imported goods, there’s no need for companies to cut prices. Any savings thanks to the euro’s decline will instead be pocketed by manufacturers and distributors.
It’s been a dramatic fall for the euro. Back in April, the European currency was trading at 1.38 dollars to the euro. That means that one dollar bought you about 72 euro cents. Now the exchange rate is hovering around 1.14 dollars to the euro, so one dollar buys you 87 euro cents.