When the dollar inflates, every country inflates: Steve Moore
President Trump’s former economic advisor Steve Moore discusses how U.S. inflation affects the world on ‘The Evening Edit.’
Americans are getting a tantalizing deal on luxury goods in Paris and Milan these days. The companies that make them have little reason to end it.
U.S. tourists have been spending heavily in designer fashion stores in European cities. Based on VAT refund data from payments companyPlanet, luxury spending by American tourists in the region wasup more than 80% in the third quarter of this year compared with the same period in 2019, before the pandemic.
It has always been a bit cheaper to buy European designer goods in the market where they are actually made. There is a markup on products sold in the U.S. or China to cover things such as import duties and freight costs. Lately, though, the premium has reached extremes. American shoppers now have to pay 38% more at home than they would for the same product in Europe, according to Bank of America data, compared with about 20% historically.
A strong dollar is the culprit. It won’t necessarily last as the European Central Bank follows the U.S. Federal Reserve in tightening monetary policy. "The ECB is behind the Fed in increasing rates but the path is the same.