Sevens Report Warns Weaker Dollar Is Supercharging a Run-Hot Economy

The latest Sevens Report argues that the U.S. economy is being pushed further into a “run-hot” phase as the dollar slides to multi-year lows. According to the firm, President Trump’s dismissal of recent dollar weakness effectively signaled tolerance — if not support — for further depreciation, accelerating trends already in place.

Sevens notes that fiscal stimulus, pressure for lower rates, deregulation, and efforts to pull in foreign capital have already tilted the economy toward overheating. A weaker currency compounds that backdrop by ensuring more liquidity is chasing a limited supply of goods and services, keeping inflation pressures elevated even as growth remains strong.

The report outlines three key transmission channels. First, a softer dollar raises import costs, lifting prices on consumer goods in an import-dependent economy. Second, it boosts earnings for multinational companies, helping explain recent outperformance in technology and consumer discretionary stocks. Third, it inflates the value of real assets such as gold, oil, and other commodities that cannot be diluted like fiat currencies.

Sevens cautions that the dollar’s roughly 11% decline over the past year is far from benign. While markets have absorbed the move so far, a faster slide toward the low 90s could unsettle investors and intensify the risk of sustained inflation alongside resilient growth.