Americans Hard Hit : As Dollar Sinks, So Do Expatriates

At Paris’ Au Bon Marche department store, where prices are low by Paris standards, an American housewife was shocked the other day by the price tag on a pair of jeans she had picked out for one of her children. She did the mental arithmetic, converting francs to U.S. dollars, and when the price worked out to $90, she put the jeans back on the rack.

The woman’s experience was typical of what Americans living abroad, particularly U.S. servicemen, are experiencing these days. As the dollar has been driven down in relation to the currencies of other countries, the buying power of Americans living in foreign countries has been severely eroded.

Today the dollar buys just about half as many French francs or Japanese yen as it would have two years ago. And although there are exceptions, notably in less developed countries such as Mexico and the Philippines, the story is much the same around the world.

$70 Baby Sitters

What this means in terms of everyday expenses is sobering--$4.25 for a gallon of gas in Rome, $70 and more for an evening of baby-sitting in Tokyo, $2.50 for a pack of cigarettes in Bonn.

Many American expatriates, their buying power diminished, have simply decided to do without. Carl Purvis, a U.S. Army sergeant at a missile base near Schwaebisch Gmuend, in West Germany, had promised his wife new furniture and saved up to buy it. But, last week, he had to beg off when prices at the local furniture stores soared beyond his reach.

“We are all living in an era of nostalgia now,” said an American living in Paris, “for those bygone days of $10 lunches and Peugeots that cost less than a Chevrolet.”

The Rome daily La Stampa put it this way: “ La dolce vita for Americans in Rome is over.”

American tourists also have felt the pressure. One was heard to comment in the Knightsbridge section of London, “We’re not buying, just looking.”

Tourist Trade ‘So So’

In Paris, where the cost of a hotel room has more than doubled in two years, official figures are not yet available, but Jean-Jacques Descamps, the secretary of state for tourism, says the tourist trade this year has been only “so so.”

But it is the Americans on long-term assignments overseas who really feel the pinch. In many cases, employers at home have recognized the difficulty and adjusted salaries. But other Americans, lacking such protection, have just cut back on luxuries and sometimes on necessities.

Harry Cressman, general director of the American Chamber of Commerce in London, noted that the beating the dollar has taken there in recent weeks is the equivalent of a 10% cut in salary. Then, using a British expression, Cressman said, “People will just have to cut their cloth accordingly.”

Lee Boam, the commercial officer at the U.S. Consulate in Frankfurt, West Germany, said that even in cases where salaries are adjusted to allow for changing exchange rates, sometimes the adjustments are “not quick enough to keep people from getting hurt.”

This has been disheartening to many. Connie Mintz, an Ashland, Ore., testing consultant, moved to West Germany last year and was delighted to find that she could afford an apartment with a lovely view of the Rhine River. But her rent “keeps going up every month,” and she has begun to wonder how much longer she can stay on.

“It’s stressful,” she told the Associated Press. “It starts to affect your whole feeling about being overseas. It makes living here a struggle, and you begin to wonder if it is worth it.”

No one knows how many Americans live abroad. Country estimates range from 5,000 in South Africa to 250,000 in Britain. West Germany, host to some 400,000 U.S. servicemen and their dependents, is probably the leader.

There are tax advantages to living abroad. The Internal Revenue Service exempts from income tax the first $70,000 of income earned abroad. On the other hand, there are local taxes to be paid, and although in some cases American expatriates pay less in taxes than they would at home, in other cases they pay more.

Pensioners, Students

Aside from government officials and members of the armed services, who pay the same taxes as they would living in the United States, the Americans abroad are for the most part men and women sent out by their employers. But there are growing numbers of retired Americans, who moved overseas because they believed they could stretch their pensions and Social Security checks further outside the United States.

Many students move abroad, where education can be less expensive and sometimes more accessible. Artists and writers also show up in the ranks of expatriates, attracted not only by the relatively low cost of living but by the atmosphere.

The atmosphere has not changed, but the cost of living definitely has.

Alison Rubury, who retired from the antique business four years ago and moved across the Atlantic to London, said she has been holding off on depositing her last three Social Security checks in the hope that the dollar would recover some of its lost value.

In Geneva, an American who does not receive a cost-of-living allowance from his employer complained, “After I pay my monthly rent, my monthly Social Security taxes and my monthly Swiss taxes, I have nothing left over for minor items like food and clothing and transportation.”

Michael Mewshaw, a writer who has lived in Rome for eight years, said that although “the dollar’s collapse may be one thing in highly developed countries like Germany and France, it seems worse in Italy, because part of the reason for coming to Italy in the first place was that it was cheap.”

Mewshaw, whose last book was published under the title “Money To Burn,” said that “going out in a group to a neighborhood trattoria used to be the basis of our social life, and even when I was a starving academic, we’d go out two or three times a week.”

Now, he went on, “We are very careful. You can pay $40 to $50 a head for a meal that used to cost $2 to $3 in the same place.”

In for a Shock

Young people looking for the low-cost life they have read about are in for a shock, he said, adding:

“The whole idea that a would-be writer or painter might throw a knapsack on his back and go off to live cheap in Greece or Spain or Italy is now absurd.”

Jim Leong, a Chinese-American from San Francisco and an abstract artist who has spent 20 years in Rome, said he has seen economic conditions like these before, “but remembering doesn’t make it any more comfortable now.”

“Forget the better cuts of meat,” he said, “and the price of cheese has gone sky-high, too. I used to buy the (International) Herald Tribune six mornings a week. Then I cut back to two. Now I no longer buy it at all.”

At current exchange rates, a single copy of the Herald Tribune, the U.S.-owned newspaper published in Paris, costs $1.50 in Rome.

A young American writer in Paris has fared no better. He arrived there last year with his wife and several years’ savings, planning to settle down and write a novel. The money is gone, along with the wife, who has returned to the United States.

American GIs, particularly those who live off-base with their families, have the biggest struggle of all making ends meet. In West Germany, every time they change dollars to marks they get fewer marks, and this means higher payments for rent and utilities, among other things.

Fortunately, much of what they need--groceries and clothing--they can buy at the PX, the post exchange, in U.S. dollars.

“Otherwise,” Sgt. Purvis said, “we’d be in trouble.”

Army Spec. 4 James Snyder, who is based in Frankfurt, said the shrunken dollar has made for a change in his personal life style.

Movies Instead

“There are a lot of concerts here that my wife and I would like to see,” he said, “but then we think about how much it costs in dollars to go out now, and we stick to movies on the base.”

Lt. Col. Ronald Lafleur, stationed at U.S. Army headquarters in Heidelberg, said: “I suppose the most disheartening thing (about the dollar’s plunge) is the increase in the ‘Little America’ syndrome. We have always encouraged our people to get out and circulate among the Germans and to travel in Europe. But that can be very expensive now. Servicemen stay on bases where they can pay with dollars. . . . It’s a real shame.”

An authority on the subject in Israel says Americans there have “never had it so bad.” That is the view of Pinhas Landau, economic correspondent for the Jerusalem Post, but many Americans living in Israel think they are better off than their countrymen in parts of Europe.

Today the dollar buys about 1.55 Israeli shekels, up slightly from the 1.50 of two years ago. Yet Americans are accustomed to much better. For most of the last two decades the dollar has increased in value against the local currency, and as a result, Americans with dollar incomes were able to stay ahead of inflation, which in Israel has been fierce--20% a year at the moment and considerably higher in previous years.

Gershon Marinbach, who retired to Israel with his wife 10 years ago and lives on Social Security, said that the cost of living has been going up 25% a year and that they have been cutting expenses wherever they can.

Careful With Electricity

“We’re more careful in going to the theater,” he said. “We use our car less, we don’t go to restaurants and we’re more careful about using electricity. All our American friends here suffer, too.”

Rabbi David Roth, another American living in Israel on a pension, said: “Everybody is feeling the squeeze. The Social Security we get doesn’t go very far.”

Americans in South Africa have felt the pressure, too, though it has been less severe than in other countries and many still manage a luxurious life style.

Steve McGrath, a consulting engineer from Detroit who has lived for nearly eight years in Johannesburg, said his rent went up 13% last month because of the dollar’s decline. But he still thinks the house is a bargain: nine rooms with a pool, a tennis court and a guest cottage for the equivalent of $1,665 month.

“In Detroit,” he said, “I would probably have to pay twice as much for something half as nice, so it is pretty hard to complain. Still, when your buying power is cut 13% overnight, you feel it. You start looking at prices. You start looking for bargains and ways to save.”

Boost in Philippines

Not all American expatriates have taken a beating with the dollar. Some have seen the dollar go up in relation to the local currency--the Philippine peso, for example.

Today, in Manila, the dollar brings about 10% more pesos than it did two years ago and is much in demand among black-market money men. “Change dollars, sir?” they ask on the street in the tourist district.

One of these dealers, asked to quote rates for yen or marks, replied, “Sorry sir, dollars only.”

The really bright spot for Americans, in this context, seems to be Mexico, where the dollar has done well because the Mexican peso has performed so poorly. Prices go up, but the number of pesos one gets for the dollar goes up, too. Thus, a taxi ride that a year ago cost 800 pesos, or about a dollar, now costs 1,600 pesos, still about a dollar.

‘High on the Hog’

Judy Furton, a retired American schoolteacher living in Guadalajara, said that because the dollar buys more and more pesos, “we live high on the hog on about $800 a month.”

She said her pension and that of her husband, also a retired school teacher, total about $2,000 a month and that they are able to save most of that.

“I know a man from New York with a wife and two children,” she said, “who (is) living on $500 a month. An older lady told us she couldn’t live on Social Security in the United States, but here she gets by on $200 a month.”

Material for this story was contributed by Times staff writers Stanley Meisler in Paris, William Tuohy in Bonn, William D. Montalbano in Rome, Dan Fisher in Jerusalem, Michael Parks in Johannesburg, Dan Williams in Mexico City and Mark Fineman in Manila, and researcher Judy Ross in London. The story was written by assistant foreign news editor Francis B. Kent.