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Why The Dollars Worst Drop Since 1973 Is Raising Your Costs
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Why the Dollar's Worst Drop Since 1973 Is Raising Your Costs

Why the Dollar's Worst Drop Since 1973 Is Raising Your CostsWhy the Dollar's Worst Drop Since 1973 Is Raising Your Costs
The US dollar suffers its worst start to the year. Why is this happening, and how does it affect you?

Published: July 3rd, 2025.

The US dollar has just experienced its worst start to a year since 1973, falling more than 10% in value against other major world currencies during the first half of 2025. While that might seem like something that only matters on Wall Street or in global finance circles, it’s not just a distant economic headline. A weaker dollar has real, everyday consequences that can affect what Americans pay at the store, how far their money goes abroad, and how stable their savings feel in the months ahead.

To understand what’s happening, it helps to know what the dollar's “value” really means. The dollar’s strength is often measured by how it compares to other major currencies, like the euro, yen, or pound. These values change constantly based on how investors, businesses, and governments view the strength of the US economy relative to the rest of the world.

This year, that confidence has slipped. Rising federal debt, changing trade policies, and uncertainty around interest rates have made some investors and financial institutions less eager to hold US dollars. As a result, the dollar has lost ground. Even though that might sound like an abstract shift, the effects show up efficiently.

One of the most immediate impacts is on the price of imported goods. When the dollar weakens, buying things from other countries, like clothing, electronics, or raw materials used in manufacturing, costs more. American businesses often pass these higher costs down to consumers. If you’ve noticed prices creeping up, especially on products made or assembled overseas, a weaker dollar may be the reason.

The change also affects international travel. When the dollar loses value, Americans get less foreign currency in exchange. That makes everything abroad, such as hotel stays, dinners, and transportation, more expensive. When planning a vacation outside the US, the exchange rate can significantly impact how far your travel budget goes.

Beyond shopping and travel, the dollar's value can influence savings and investments. A falling dollar can lead some global investors to move their money elsewhere, which may impact US stock and bond markets. While this doesn’t always lead to immediate losses, it can contribute to market volatility or slower growth in retirement accounts. On the other hand, investments in foreign companies may benefit when earnings in stronger currencies are converted back into US dollars.

What you can do right now

If the dollar’s decline feels overwhelming, there are a few practical steps you can take to reduce the impact on your everyday life:

  • Be more mindful when making purchases: Imported goods and internationally made products may rise in price first. Compare options and check labels—you might save by choosing locally made alternatives
  • Delay major international travel plans: Consider postponing or closely watching exchange rates if planning a big overseas trip. Even small changes can make a big difference in total costs
  • Review your online shopping habits: Services or products in foreign currencies may become more expensive. Look for US-based alternatives or deals that lock in prices
  • Diversify your investments: If you have savings or retirement accounts, speak to a financial advisor about how much of your portfolio is exposed to currency changes. International investments can sometimes offer balance when the dollar weakens
  • Watch out for inflation creep: Keep a closer eye on monthly budgets, especially if you notice higher prices on food, fuel, or household essentials. Consider switching to store brands or shopping in bulk to stretch your dollar further

The dollar's value may rise again or stay down for a while. Either way, small choices now can help you stay ahead of the curve and protect your wallet.

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