The strong dollar has cost the United States nearly 2 million jobs because of a resulting flood of foreign imports, a study released today concludes.
The study, made public at a hearing of the congressional Joint Economic Subcommittee on Economic Goals, suggests that the high value of the dollar was responsible for $55 billion, or 45%, of the 1984 U.S. trade deficit.
"No area of U.S. industry is immune to the overwhelming currency advantage of foreign countries," Edward G. Jefferson, chairman of E. I. du Pont de Nemours and Co., testified before the subcommittee.
"The high-technology sector has seen a $27-billion trade surplus in 1980 slip to just $5 billion last year," Jefferson said.
Deficit Reduction Urged
The study, prepared by Data Resources Inc. of Lexington, Mass., concludes the United States must reduce the federal budget deficit to make the nation more competitive in world markets.
"Our export sales are approximately 15% lower and our imports 15% higher than would have been the case with a normal dollar value," the report said.
"The sharp appreciation of the dollar since 1980 has cost 2 million jobs--1.5 million in manufacturing alone--and cut national output by 4%," the study said.
The report said the overvalued dollar has cost 144,000 jobs in California; 104,000 in New York; 97,000 in North Carolina; 92,000 in Pennsylvania; 75,000 in Michigan; 73,000 in Ohio; 69,000 in Texas, and 57,000 in Illinois. Figures for other states were not given.
Interest, Deficit Linked
The dollar has risen in value because of high interest rates, which stem from ballooning budget deficits, the report said.
"The greater the federal deficit, the stronger the federal government's demand for funds. The greater the demand for funds, the higher the level of interest rates; the higher the level of American interest rates . . . the greater the demand for dollar investments," it concluded.
The study proposes reducing the deficit by limiting growth in entitlement programs such as Social Security.