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June 28, 2009 – Comments (1)

One of the industries that was discussed on this blog last about where other jobs might come from was that tourism could be developed, and certainly the shorter term results showed that tourism was alive and very well in New York.  It may have also been good in other places.  Certainly at the time if you had always wanted to go to New York, well, the US dollar was at a low relative to other currencies so the price was the cheapest it had been for non-American tourists for years.  With some recovery of the US dollar that isn't so anymore.

In Canadian Tourism versus US Tourism I went over the reasons why BC was able to develop its tourism market. 

Seems I discussed some of the same reasons in Local Economies.

Well, those high prices to recover real estate costs means that tourist make choices to use their limited travel dollars elsewhere.  I still haven't made a choice to visit New York, and I really want to see New York.  I went to Costa Rica for 3 weeks, took Spanish classes for two of those weeks, all for the price of probably 3 nights in New York.

Mish has a post showing just what the high real estate is doing to California.  What amazes me is that 25% of the hotel industry took out new loans during the peak real estate years.  Who in their right mind would think that tourism could support 25% doing business growth?  Obviously many businesses got the same idea when things looked good and those running the businesses had a poor understanding of the business cycle.

I was just thinking how much a declining dollar tends to hurt a country in that usually their loans are in a different currency so the loans go up proportionately, however, for the US it is likely their loans are in US dollars so a weakening dollar would not hurt the US the way it has other countries.  A weakening dollar would give locally produced goods better competition over imports, which would improve the domestic job market, it would make people consider the US more for vacations, it would make visiting other countries more expensive to Americans would be more inclined to spend their vacation dollars domestically, it would improve the price on exports.  It would really increase energy costs, but the US has had a dramatically priviledged energy costs that has been very bad environmentally so I personally do not think being forced to be more responsible about energy use is a bad thing.

So, does a weakening dollar mean price increases?  Certainly if prices go up relative to a dollar weakening no advantage is gained.   Prices for non-US goods would go up, and certainly anything needed from materials imported to produce other goods would have to transfer that cost, but I do not see why it would have to cause huge price increases relative to a weakening.  Price increases should be less then the relative weakening.

Anyway, that's my ramblings today.

 

1 Comments – Post Your Own

#1) On June 29, 2009 at 11:02 AM, ByrneShill (77.38) wrote:

NY isn't that expensive. I guess the plane ticket for you is, but if you live at a driving distance (like I do), it's less than 100$ to get there, divided by the number of passengers in the car. Then a Days-Inn in Jersey is roughly 120-150$ a night. You can find cheaper at Howard Johnson or slightly crappier hotels; usually the only difference is that those hotels don't have a restaurant.

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