There are plenty of reasons to be concerned about the plummeting value of the dollar. It boosts the price of imports and raises the specter of inflation. Long term, a declining dollar could undermine international confidence in the U.S. economy. In the short run, however, there's plenty of upside, particularly for an export-oriented state like Washington. The cheaper dollar means our apples, airplanes and wines are more competitive in international markets. While a cheap dollar makes that trip to Europe more expensive, it encourages more visitors to travel to our state and to spend money at our restaurants and hotels. As the graph below shows, a decline in the dollar has typically been accompanied by a rise in state exports.
The weak dollar wouldn't help, of course, if the rest of the world remained mired in recession. Fortunately, for the first time in living memory, the rest of the world is leading us out of the recession. China, in particular, is proving unexpectedly strong. Not only is that helping boost our exports, it's also helping to attract investments to our shores.
Rogers Weed, director of the state Department of Commerce, says he recently met with the CEO of a Chinese real estate firm that wanted to invest in Washington state venture companies with the goal of introducing those businesses to the Chinese market. "A lot of Asian countries like to operate on a government-to-government basis to help connect business to business," says Weed. "We can help them connect to businesses."
European companies are also shopping in the region, according to Michael Butler, CEO and chairman of Cascadia Capital. "European corporations are coming in aggressively as buyers," he says, pointing to a deal he recently helped arrange in which the Shell Technology Ventures Fund, one of whose principal funders is the oil giant Royal Dutch Shell, invested in Prometheus Energy, a Redmond-based producer and distributor of liquid natural gas.
Anticipating increased interest from Japan, a Seattle real estate group is in the process of negotiating an agreement with its counterparts in Japan's Kansai region. Meanwhile, real estate agents see a growing trend in which wealthy Chinese move to Seattle, buy big houses and send their children to American schools to bypass the intense competition to get into top Chinese universities. Some of those recent immigrants are continuing to operate their Chinese companies from Seattle, helping to add precious jobs to our economy.