How Europe's Crisis Could Hurt the U.S. Economy

U.S. News and World Report
January 23, 2012

The economic future of Europe looks gloomy: default in Greece appears inevitable and a recession is in the cards. While Greece is at the epicenter of the troubles right now, the economic effects of the E.U. crisis could be profound and global. Here are three important numbers that help illustrate what the stakes are not only for the European economy but the U.S. and the rest of the world.

18.1 percent

That's the share of U.S. exports that went to the E.U. during the first 11 months of 2011, according to figures from the Census Bureau. An economic crisis in Europe directly threatens U.S. firms, especially manufacturers, which makes for diminished profits and jobs stateside. If the Eurozone faces a "deep" and "prolonged" recession, a possibility brought up by the European Commission in November, the U.S. economy would take a hit as demand for goods falls.

14.4 billion

The amount, in euros (roughly $18.5 billion), that Greece will owe—and be unable to pay—bondholders on March 20. Many say the country could default that day, as Greece simply doesn't have the funds to repay its debtholders. Therefore, the Hellenic Republic has to negotiate a writedown on that debt with its private creditors.

After a weekend of haggling, that deal has yet to be struck. Without a deal, Greece would enter what some are calling a "hard default"— a scenario in which Greece simply runs out of money and cannot pay off its creditors.

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