The surprising recent buoyancy of the loonie is, as Stephen Harper said this week, cause for "concern." The PM was reinforcing an alarm sounded by Mark Carney, governor of the Bank of Canada, for several weeks.

A loonie that is gaining strength chiefly in relation to a weakening U.S. dollar is a competitive disadvantage to everything from Canadian-manufactured exports to the B&B sector.

But this phenomenon is a necessary price for rebuilding the United States economy, to which Canada's fortunes are tied.

Despite dreadful economic conditions stateside, the U.S. greenback held up well until recently. Global investors, in a flight to safety amid financial chaos last year, were attracted to U.S.-denominated investments.

For all that the U.S. was the epicentre of the world economic crisis, it remains an oasis of political stability that has never defaulted on its debt obligations.

That has been something of a curse for the U.S., however. Even before the downturn, its manufacturing sector was suffering not only from the low labour costs of offshore rivals, but from artificially low currencies in which those exports were priced. For a decade, the U.S. has lobbied Beijing to free its currency to rise, but with scant success.

Fortunately, as the storm clouds have lifted this year, global investors have become emboldened to trade some of their U.S.-denominated investments – which have propped up the greenback – for higher-yielding bets on other currencies and other nations.

And that is a necessary boon to the U.S. economy. A falling greenback makes America's manufactured exports more price-competitive. It will have the simultaneous effect of making imports more costly. The net impact should be a much-needed boost in U.S. job creation.

There are about 15 million jobless Americans. Officially, the U.S. jobless rate is just under 10 per cent. But the more telling rate of underemployment, which few politicians or mandarins discuss, is about 17 per cent. The higher figure accounts for Americans who would like to work but have given up looking for a job; workers who've had their hours cut; people working a succession of low-paying temporary jobs with no health and pension benefits; and people working two or three jobs to make ends meet.

The consensus opinion among economists is for a "jobless recovery," with intolerably high joblessness and underemployment lasting into 2011. Economic growth as measured by GDP turned positive last summer for the first time since the recession began in December 2007. But hiring, always a lagging factor in economic recovery, has not resumed.

America is no longer losing more than 700,000 jobs a month as it did earlier this year during the worst of the downturn. But only small comfort can be taken from lower U.S. job-loss numbers since, including the more than 200,000 jobs lost in September.

America, with a weaker social safety net than Canada, Europe or Japan, traditionally relies more than its peers on massive job creation as the principal source of household income. By varying estimates, there remains a shortfall in U.S. economic activity – or a "capacity gap" – of between $2 trillion (U.S.) and $3 trillion. That's the difference between America's GDP and where its GDP needs to be in order to recover the lost jobs and create the millions more to accommodate new entrants to the workforce.

For that to happen, moribund U.S. corporate investment in new plants and equipment needs the jolt of a greater export competitiveness that comes with a lower dollar.

Harper correctly noted this week that the greenback's slide "does have difficult effects on our economy." Yes, a loonie that soon reaches parity with the greenback, as many Canadian economists have been predicting all year, does hurt. But what hurts us more is that the trading partner with which we do $1 billion worth of business each day remains in the ICU.

Many U.S. exports, from Boeing aircraft to the Buicks that GM sells with growing success in Japan and China, contain high-value Canadian components.

Even putting aside that boost to our economy as America's export prowess grows, our own economic conditions won't improve appreciably until the U.S. economy returns to robust health.

And for the next while, perhaps two years or so, one of our best hopes for that outcome is that the greenback finds and remains at a lower, more competitive level.

dolive@thestar.ca