An increasing number of retailers have been blaming the strong dollar for less-than-stellar results.
Now President Trump has become an unlikely ally.
He took to Twitter Tuesday morning to complain that the strong greenback against a raft of currencies is hurting the U.S. economy and in doing so, singled out the independent Federal Reserve for raising interest rates too quickly.
“The euro and other currencies are devalued against the dollar, putting the U.S. at a big disadvantage. The Fed Interest rate way too high, added to ridiculous quantitative tightening! They don’t have a clue!” he tweeted.
He was responding to a report showing that tourists have been flooding Europe to take advantage of competitive exchange rates. As a result, tourist levels have dipped in some U.S. cities, hurting brands that rely on visitors who come to the States to shop.
Luxury jeweler Tiffany & Co. is one of them. Its sales for the quarter ended April 30 declined 2.9 percent to $1 billion as a strong dollar dissuaded tourists from opening their wallets in the Americas.
“The strong dollar had a meaningful impact on first-quarter retail sales attributed to foreign tourists in the Americas,” its chief executive officer Alessandro Bogliolo said last week, adding that tourist sales in the U.S. were down approximately 25 percent. The slide was even steeper among Chinese visitors.
Calvin Klein owner PVH Corp., meanwhile, has singled out the strong U.S. dollar as having hurt tourist spending and chilled the company’s outlet sales.
And it’s not just tourist spending as the strong dollar is also hampering U.S. companies that operate around the world.
Capri Holdings Ltd., for example, is forecasting Michael Kors’ revenue to come in slightly lower than expected at $4.45 billion for the 2020 fiscal year, “reflecting incremental negative foreign exchange impact from an anticipated stronger U.S. dollar,” as well as lower wholesale revenue.
Trump has on numerous occasions attacked the Fed for lifting rates four times last year, while other central banks largely sat on their hands. At one point, he even declared that the Fed was a bigger problem than China and said he was unhappy with his selection of Jerome Powell as chairman of the rate-setting committee.
His latest jibe comes despite the fact that the Fed hasn’t changed rates since December and expectations are high that it could in fact ease its policy.
In his most recent speech in Chicago last week, Powell said: “We are closely monitoring the implications of these developments for the U.S. economic outlook and, as always, we will act as appropriate to sustain the expansion, with a strong labor market and inflation near our symmetric 2 percent objective.”