If this chart of exports is anything to go by, it’s hard to see how the US would become unwell:
The eurozone’s neighbours will almost inevitably get the flu. But the US? Well… even when services are also included, American exports to the currency bloc comprise three per cent of American GDP, points out Ethan Harris of the Economics at Bank of America Merrill Lynch. Enough for full-blown contagion?
From a note by Harris on Thursday:
Historically, crises in Europe have tended to have relatively modest spill-over impacts on the US and global economy. However, growing trade, banking, and most important, psychological linkages have made “Euro-flu” much more contagious. The European crisis has already helped cause a global slowdown.
Yeah, thanks, Europe!
Guess it’s only fair though, given that:
In the 2007-09 crisis, the causation seemed to go mainly from the US to Europe.
Not that correlation = causation of course, but eyeballing the lead/lag on the below chart of the equity risk premium anyway…
Furthermore, according to the “Bloomberg market wrap” (which we haven’t looked into the methodology details of, so reader beware), six of the biggest moves in the S&P 500 in 2011 were driven by events in Europe:
As for 2012:
What goes around, comes around? Cough, subprime, cough.
(Too harsh, we know… Europe, and the eurozone in particular, made its own mess too.)
The rise and fall of European banking – FT Alphaville