Johnson and Johnson’s Earnings is Proof of Why the US Government Really Wants a Weaker Dollar

April 15, 2008

Strong Earnings from Johnson and Johnson is one today’s biggest stories. Although sales have increased in all 3 of its units (medical devices, consumer products and pharmaceuticals), if not for the weakness of the US dollar, drug sales would have actually declined.

Revenues increased 7.7 percent in the first quarter with currency moves contributing 5.1 percent to growth. The weakness of the US dollar is finally having a positive impact on the US economy. This morning the Empire State manufacturing survey also jumped over 20 points. T

Johnson and Johnson is not the only company to benefit from exchange rate fluctuations. Last month, Nike Inc said that strong overseas sales and beneficial currency rates pushed its profits up 30 percent. Earlier this year, IBM reported a 8 percent increase in sales in 2007 but acknowledged that the increase would have been only 4 percent if exchange rates were excluded.

With earning season upon us, the dollar’s weakness could help to boost earnings for many multinational corporations. The US companies that will do the best are the ones that are more reliant on international sales because exports will be boosted by the weakness of the greenback.

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