This past January 13, a week before the Presidential inauguration, the U.S. dollar was riding high. Measured against a basket of other currencies, including the euro and the yen, it stood at 109.96. This meant a dollar would buy more than a euro on the world markets, and imported goods and services were cheaper for U.S. buyers. The previous September, the dollar was basically on par with the euro, so this jump helped to tame the inflation rate a bit.
Since then, the dollar has sunk to a low of 96.8 in early July before recovering a bit to where it was last September. You may have read headlines asking why the dollar has experienced its fastest 6-month drop since 1973, which was the year President Nixon took the American currency off the gold standard.
Proposed answers for the drop include uncertainty around tariffs, an out-of-control federal deficit (and a dramatic raising of the debt ceiling), unprecedented questions about the independence of the Federal Reserve Board, and the downgrading of the U.S. credit rating. These factors seem to be outweighing the relative stability of the U.S. economy and high U.S. interest rates, which would normally lead to a stronger dollar.
The dollar’s strength is impacted by international holders of U.S. financial assets, and their leverage is not inconsiderable: $30 trillion worth of U.S. stocks, Treasury bonds, and corporate bonds. If those banks and investors start selling off dollar-denominated holdings, the dollar’s value will sink further. That would be good for inflation and make American-made products a bit cheaper in foreign marketplaces. However, a weaker dollar also reflects poorly on the American economy and potentially points to a day when the world begins to reduce its dependence on the American currency for international transactions.
The Fed’s View of a Resilient Economy
The most complete economic report you’re likely to get from any source is delivered routinely by the Federal Reserve Board when they explain whether they’re going to raise, lower, or stand pat on the Fed Funds rate. The Fed decided not to make any changes this time around, and its economic explanation was mildly negative about America’s prospects for the remainder of the year.
In the last policy report six weeks ago, Fed Chair Jerome Powell stated that the economy “has continued to expand at a solid pace”. In this one, he said that “growth of economic activity moderated in the first half of the year”. The Dallas branch of the Fed has noted that manufacturing order volume is declining and transportation equipment manufacturers are implementing layoffs. Overall, the Labor Department reported a 3.3% hiring rate in June, below the pre-Covid average of 3.9% and in line with levels generally associated with recessions.
The Central Bank wants to bring the inflation rate down to 2%. With rates at 2.7%, the report noted that they could go either way from here, depending on the impact of the ever-shifting tariff regime. One worrisome sign is that even with moderate rates near the Fed target, personal consumption—which makes up about two-thirds of the U.S. economy—came in at the worst six-month stretch for spending since the last half of 2022.
For investors, the best course has been to ride out the economic turbulence, trusting that the companies they’re invested in are each, in their own way, making adjustments to our ever-shifting economy. So far this year, about 83% of the companies that have reported their earnings have exceeded analysts’ profit estimates—the highest share of ‘beats’ since the second quarter of 2021.
As the market hits new highs seemingly every week, we are reminded of this resilience. Like the Fed, Corporate America seems to know what it’s doing.
Worst, and Best, Home Improvement ‘Investments’
You have a little extra cash and you want to improve the look or livability of your home. One way to prioritize home improvements is to eliminate the types of projects that are least likely to get you a return on your investment, in the form of a more valuable home if/when you decide to sell.
Recently, the website ‘garage living’ offered its take on the lowest remodeling return on investments (ROIs), based on two factors: whether the renovation appeals to a broad range of buyers, and the cost of the upgrade.
First on the list is a sunroom, where homeowners can accommodate their hobby of growing plants. The website offers expert estimates that you are likely to recoup somewhere between 45% and 50% of the cost when it comes time to sell your home. Sunrooms are expensive to build and maintain, and many potential buyers have no interest in one.
Second on the list is a swimming pool, which can cost anywhere from $15,000 to $60,000 to install. The ROI is less than 25%, and even lower if you happen to live in a northern climate where pool use is limited to just a couple of months. If you install an above-ground pool to save money, realtors say that this could actually decrease your home’s market value.
Third? Adding a bathroom (50-60% recouped costs) in part because it requires expensive plumbing and electrical work.
Fourth? Converting your garage into a living space. Many buyers believe having a garage is extremely or very important for parking and extra storage space. You’ll only recover about 60% of what you spend.
Finally, realtors say that a home theater offers very niche appeal to prospective homebuyers, and chances are you will recoup 25-35% of your investment at sale.
What are some of the best investments? The Buzzfeed website says that improving the windows improves noise and temperature control and adds curb appeal. Adding a hot tub, particularly in homes located in colder climates, can improve a home’s value. You can also improve a home’s value by putting in a backyard barbecue with a countertop and mini-fridge, which creates what feels like an additional room for entertaining. Finally, new faucets, toilets, and a recirculating hot water pump for the bathroom save money and create an impressive appearance to prospective home buyers.
Download a PDF version of this article below.
Sources:
https://tradingeconomics.com/united-states/currency
https://www.advisorperspectives.com/articles/2025/07/31/dovish-fed-nothing-cheer
https://www.advisorperspectives.com/articles/2025/07/25/s-p-500s-profit-engine-powering-stocks-rally
https://www.garageliving.com/blog/worst-home-renovation-projects
https://www.buzzfeed.com/dannicaramirez/best-worst-home-renovation-projects
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