The U.S. dollar is near its highest level in more than a decade. A strong U.S. dollar has many benefits to consumers. When traveling abroad, goods and services cost less in U.S. dollars, making foreign destinations attractive vacation options for many. Domestically, imported items also cost less in U.S. dollars, with some of these savings passed along to consumers.
At the same time, a strong U.S. dollar means that exported goods and services cost more in foreign countries, putting downward pressure on export sales. Compensating for this effect may require lower prices offered overseas and an associated lower revenue and earnings for U.S. companies.
So far, at least for large companies, this has not been the case. S&P 500 companies generate a significant portion of their revenue and earnings abroad. In fact, based on the first quarter of 2022, those that generated more than one-half of their sales domestically had weaker earnings growth than those companies that generated more than one-half of their sales abroad.
