Economists: Don't count on exchange rates

WASHINGTON, Nov. 15 (UPI) -- A weaker U.S. dollar is not a labor market panacea that automatically leads to increased exports and more hiring, economists said.

The basic theory is that the weak dollar makes U.S. goods cheaper overseas, which increases demand and leads to hiring, The New York Times reported Monday.

But the largest U.S. companies have production facilities overseas. If there is more demand in China for General Motors Co. cars, GM will make them in China and South Korea.

Many other U.S. products are made with imported parts, meaning the cost of components will go up, even as the dollar puts downward pressure on the cost of the finished product.

"There are very few corporations that would see this just in one way. It cuts across a whole bunch of lines," said Martin Regalia, chief economist at the U.S. Chamber of Commerce.

Chief economist of the Manufacturers Alliance Daniel Meckstroth said there will be a positive effect on exports, "but it won't be the driver of jobs."

At the Peterson Institute for International Economic in Washington, senior fellow Gary Hufbauer said a 10 percent decline in the U.S. dollar would increase exports by $100 billion over two years. That would add 500,000 jobs to the economy.

"Not bad," he said. Still, he noted, there are 15 million unemployed U.S. workers, most of whom could not rely on a weaker dollar to provide them with a paycheck.