Today in the economy

[CGM]

3/6/09


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USA - Unemployment Rate

Actual8.10%|Forecast7.90%|Previous7.60%

Determines the percentage of total work force that is unemployed and actively seeking employment during the last quarter. A downward trend has a positive effect on the nation's currency as working people tend to spend more money, and consumption makes up a large portion of GDP.

This strikes me as a bit of a sloppy statement. For starters it is not exactly clear what they mean by "a positive effect on the nation's currency" Maybe an inverse relationship between the unemployment rate and the exchange rate can be described, but they sure haven't done it here.

I agree this is a little vague. It would be interesing to see a chart that shows unemployment vs. exchange rates.

Paging Mr. Kirkland Laing......................paging Mr. Kirkland Laing................you're needed in the lobby.

Hmmm, now that I think about it, I suppose if domestic consumption goes up, then business is better and then more people want to invest in your country which would tend to upward pressure on your exchange rate. But it seems like an "other things being equal scenario". It depends what is happening in the other countries that the domestic currency is being measured against.

Interestingly enough, the Canada-US exchange rate (the value of the Canadian Dollar relative to the US Dollar) has fallen heavily in the last several months

[killersheep]

This strikes me as a bit of a sloppy statement. For starters it is not exactly clear what they mean by "a positive effect on the nation's currency" Maybe an inverse relationship between the unemployment rate and the exchange rate can be described, but they sure haven't done it here.

I agree this is a little vague. It would be interesing to see a chart that shows unemployment vs. exchange rates.

Paging Mr. Kirkland Laing......................paging Mr. Kirkland Laing................you're needed in the lobby.

Hmmm, now that I think about it, I suppose if domestic consumption goes up, then business is better and then more people want to invest in your country which would tend to upward pressure on your exchange rate. But it seems like an "other things being equal scenario". It depends what is happening in the other countries that the domestic currency is being measured against.

Interestingly enough, the Canada-US exchange rate (the value of the Canadian Dollar relative to the US Dollar) has fallen heavily in the last several months

Exchange rates by default are compared to the American dollar though.
I seem to remember something about the 1972 value of the dollar being considered the true value of "one dollar" and may be what they are refering to here. Of course that may have been a drug induced conversation I had with lizard people as well.

[CGM]

I agree this is a little vague. It would be interesing to see a chart that shows unemployment vs. exchange rates.

Paging Mr. Kirkland Laing......................paging Mr. Kirkland Laing................you're needed in the lobby.

Hmmm, now that I think about it, I suppose if domestic consumption goes up, then business is better and then more people want to invest in your country which would tend to upward pressure on your exchange rate. But it seems like an "other things being equal scenario". It depends what is happening in the other countries that the domestic currency is being measured against.

Interestingly enough, the Canada-US exchange rate (the value of the Canadian Dollar relative to the US Dollar) has fallen heavily in the last several months

Exchange rates by default are compared to the American dollar though.
I seem to remember something about the 1972 value of the dollar being considered the true value of "one dollar" and may be what they are refering to here. Of course that may have been a drug induced conversation I had with lizard people as well.

The way you used the word "though" makes me think you are trying to make a point about what I said, but I'm not sure what it is.

[killersheep]

Hmmm, now that I think about it, I suppose if domestic consumption goes up, then business is better and then more people want to invest in your country which would tend to upward pressure on your exchange rate. But it seems like an "other things being equal scenario". It depends what is happening in the other countries that the domestic currency is being measured against.

Interestingly enough, the Canada-US exchange rate (the value of the Canadian Dollar relative to the US Dollar) has fallen heavily in the last several months

Exchange rates by default are compared to the American dollar though.
I seem to remember something about the 1972 value of the dollar being considered the true value of "one dollar" and may be what they are refering to here. Of course that may have been a drug induced conversation I had with lizard people as well.

The way you used the word "though" makes me think you are trying to make a point about what I said, but I'm not sure what it is.

Simply poor word choice on my part, my apologies for any confusion I have caused. As for the rest of that rambling I am hoping to verify if that is true or not and that relates to your original statement of "other things being equal scenario" and getting clarity on that. Because the logic of the meaning of this measurement differs greatly if compared to a previous US dollar OR compared to a specific foreign currency OR some other index.

[CGM]

Exchange rates by default are compared to the American dollar though.
I seem to remember something about the 1972 value of the dollar being considered the true value of "one dollar" and may be what they are refering to here. Of course that may have been a drug induced conversation I had with lizard people as well.

The way you used the word "though" makes me think you are trying to make a point about what I said, but I'm not sure what it is.

Simply poor word choice on my part, my apologies for any confusion I have caused. As for the rest of that rambling I am hoping to verify if that is true or not and that relates to your original statement of "other things being equal scenario" and getting clarity on that. Because the logic of the meaning of this measurement differs greatly if compared to a previous US dollar OR compared to a specific foreign currency OR some other index.

OK, by the statement "other things being equal" I just meant if nothing else changed. An increase in employment in the USA might lead to an increase in the value of the US dollar, other things being equal. (if nothing else changed) But if Canada also experienced a corresponding improvement in the economy, then you would think that the exchange rate between the two countries would not change much as a result.

[killersheep]

The way you used the word "though" makes me think you are trying to make a point about what I said, but I'm not sure what it is.

Simply poor word choice on my part, my apologies for any confusion I have caused. As for the rest of that rambling I am hoping to verify if that is true or not and that relates to your original statement of "other things being equal scenario" and getting clarity on that. Because the logic of the meaning of this measurement differs greatly if compared to a previous US dollar OR compared to a specific foreign currency OR some other index.

OK, by the statement "other things being equal" I just meant if nothing else changed. An increase in employment in the USA might lead to an increase in the value of the US dollar, other things being equal. (if nothing else changed) But if Canada also experienced a corresponding improvement in the economy, then you would think that the exchange rate between the two countries would not change much as a result.

That still begs the question comparison to what? The example you use (Canadian Dollar) is a moving target, I would assume and probably incorrectly there is a standard or index in comparison.

[El Kabong]

http://www.youtube.com/watch?v=3c4SyrNdE5E

http://www.youtube.com/watch?v=TkGpDCEJoKA&NR=1

[CGM]

Simply poor word choice on my part, my apologies for any confusion I have caused. As for the rest of that rambling I am hoping to verify if that is true or not and that relates to your original statement of "other things being equal scenario" and getting clarity on that. Because the logic of the meaning of this measurement differs greatly if compared to a previous US dollar OR compared to a specific foreign currency OR some other index.

OK, by the statement "other things being equal" I just meant if nothing else changed. An increase in employment in the USA might lead to an increase in the value of the US dollar, other things being equal. (if nothing else changed) But if Canada also experienced a corresponding improvement in the economy, then you would think that the exchange rate between the two countries would not change much as a result.

That still begs the question comparison to what? The example you use (Canadian Dollar) is a moving target, I would assume and probably incorrectly there is a standard or index in comparison.

I think we are not making ourselves clear. If we are talking about exchange rates then I don't see that there is some sort of fixed index. By definition, an exchange rate is relative to some other currency. So things fluctuate.

The original comment in the article you posted was something about increased employment having a positive effect on the country's "currency" If he wasn't talking about exchange rates, then what was he talking about? Some sort of benchmark of the US dollar? Purchasing Power? Well, one might well argue that increased employment leads to increased demand which leads to inflation. This can hardly be likened to a "positive effect on the currency" can it?

So I guess we need to know what he means by "a positive effect on the currency".