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Weekly Perspective
August 11, 2025​
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Burgernomics: A Look at the Big Mac Index.
During the first six months of 2025, the United States dollar delivered its worst performance since 1991. “The U.S. Dollar Index, which measures the value of the greenback against the world’s six most traded currencies, has lost almost 11 [percent] of its value…,” reported Valerio Baselli of Morningstar.
The drop in the U.S. dollar’s value hasn’t made as big a difference as some might have expected – at least when it comes to buying burgers abroad.
Since 1986, The Economist has been using the “Big Mac Index” as a lighthearted way to measure the relative value of currencies across the world. In theory, if currency exchange rates are properly aligned, a burger should cost the same no matter where it is purchased. (This is known as purchasing-power parity.) That’s rarely the case, so the index helps identify which countries’ currencies are overvalued or undervalued.
“Purchasing-power parity suggests that, with a Taiwanese Big Mac costing 78 Taiwanese dollars and an American one $6.01, the currencies’ exchange rate should be the ratio of the two prices. Hence $1 should buy NT$13 [new Taiwan dollars]. In reality, it buys NT$29. The Big Mac index therefore concludes that the Taiwanese dollar is greatly undervalued against the greenback, by some 56 [percent],” explained The Economist.
In July 2025, The Economist updated the Index, comparing the price of a burger in the U.S. to the price overseas. (The price of a burger in the United States rose from $5.79 in January to $6.01 in July.) After the decline in the U.S. dollar, currencies in many Asian countries remained significantly undervalued relative to the dollar. For example, a burger costs:
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49.8 percent less in Hong Kong than it does in the United States.
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41.2 percent less in Japan than it does in the United States.
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41.1 percent less in Indonesia than it does in the United States.
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38.5 percent less in India than it does in the United States.
In contrast, a burger costs:
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54.7 percent more in Switzerland than it does in the United States.
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39.0 percent more in Sweden than it does in the United States.
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36.1 percent more in the Euro than it does in the United States.
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31.1 percent more in Britain than it does in the United States.
Overall, European countries have seen their currencies become more expensive when compared to the U.S. dollar, while currencies in China, Japan, Singapore, South Korea, Taiwan and Vietnam remain undervalued relative to the U.S. dollar. “Most are now even cheaper,” according to The Economist.
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Sources:
https://insight.factset.com/sp-500-earnings-season-update-august-1-2025
https://www.barrons.com/articles/stock-market-earnings-data-buy-sell-f3743245?mod=hp_LEDE_C_3 or go to https://resources.carsongroup.com/hubfs/WMC-Source/2025/08-11-25-The-Stock-Market-Is-Stuck%20-%202.pdf
https://abcnews.go.com/Business/us-headed-recession-experts-weigh/story?id=124407347
https://www.bloomberg.com/news/articles/2025-08-01/us-manufacturing-contracts-at-fastest-pace-in-nine-months or go to https://resources.carsongroup.com/hubfs/WMC-Source/2025/08-11-25-US-Manufacturing-Contracts%20-%204.pdf
https://www.bloomberg.com/news/articles/2025-08-05/us-service-activity-nearly-stagnates-as-employment-contracts or go to https://resources.carsongroup.com/hubfs/WMC-Source/2025/08-11-25-US-Service-Activity%20-%205.pdf
https://global.morningstar.com/en-gb/markets/how-low-can-us-dollar-go
https://www.economist.com/interactive/big-mac-index or go to https://resources.carsongroup.com/hubfs/WMC-Source/2025/08-11-25-Our-Big-Mac-Index-Shows-How-Burger%20-%209.pdf
https://www.economist.com/finance-and-economics/2025/07/16/our-big-mac-index-will-sadden-americas-burger-lovers or go to https://resources.carsongroup.com/hubfs/WMC-Source/2025/08-11-25-Our-Big-Mac-Index-Will-Sadden%20-%2010.pdf
https://www.adamsmith.org/adam-smith-quotes
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