The tremors from Europe’s financial upheaval have reached U.S. shores, rattling consumers and companies.
The consequences have been limited so far. Yet the United States and Europe are so closely linked that any slowdown across the Atlantic is felt here.
U.S. makers of cars, solar panels, drugs, clothes and computer equipment have all reported effects from Europe’s turmoil.
Nightmare scenario: Traders at the New York Stock Exchange have little to cheer about in the current climate
Worries that Europe’s crisis could worsen and spread are spooking investors and consumers just as the holiday shopping season nears, the Associated Press reports.
Some fear U.S. consumers could rein in spending. Europe’s sputtering growth is already dragging on some U.S. companies’ profits and could further slow the U.S. economy.
The crisis ‘seems to be coming to a head right at the time the U.S. economy is at its most vulnerable,’ said Mark Vitner, an economist at Wells Fargo.
It’s affecting companies like Marlin Steel Wire Products, a 34-employee business based in Baltimore that’s been seeking a $4 million contract from a German manufacturer for an industrial steel wire project.
Marlin’s CEO, Drew Greenblatt, says the German firm is in ‘pause mode’ because of Europe’s turmoil.
The German company had promised the order by early November. Marlin’s overall sales are growing briskly. But sales to Europe have been sinking. ‘If they were ordering like they customarily do, we would have hired more guys,’ Greenblatt said.
The European Union is the No. 1 U.S. trading partner. Nearly $475 billion in goods crossed between the regions in the first nine months of 2011.
About 14 per cent of revenue for the 500 biggest U.S. companies – roughly $1.3 trillion – comes from Europe.
The U.S. economy is especially vulnerable to the European crisis because it’s growing so weakly and facing other risks, such as weak hiring, stagnant pay, high energy costs, a wide trade deficit and potentially steep government spending cuts.
‘It won’t take much to tip us into another recession,’ said Sung Won Sohn, an economics professor at California State University, Channel Islands. ‘If Europe gets into any deeper trouble, it will take us and the rest of the world down, too.’