European debt crisis could pose serious threat to U.S. economy
European debt crisis could pose serious threat to U.S. economy
The U.S. economy may face a graver threat from Europe’s debt crisis than is currently thought, the Organization for Economic Co-operation and Development (OECD) said in a report warning the recovery could be derailed, Reuters reported.
In an economic outlook released today, the OECD said the level of uncertainty surrounding the U.S. economy was high and risks were heavily tilted to the downside.
“Negative spillovers from the turmoil in European markets could be greater than expected and have the potential to derail the recovery in activity and renew fears among financially fragile households and businesses,” according to the report.
So far, analysts and some Federal Reserve officials have played down concerns that the euro zone debt crisis will hit the broader economy hard.
One reason they cite is that U.S. exports to the euro zone account for only about 2 percent of gross domestic product, so the pain from the region’s fiscal crisis will be transmitted mostly through declining stock prices.
The OECD forecast U.S. growth of 1.7 percent this year, picking up to 2 percent in 2012, Reuters said.
In the event of a shock from the debt crisis, the OECD recommends easing fiscal tightening by prolonging extended unemployment benefits and increasing access to income tax credits and food stamps.
The U.S. economy may face a graver threat from Europe’s debt crisis than is currently thought, the Organization for Economic Co-operation and Development (OECD) said in a report warning the recovery could be derailed, Reuters reported.
In an economic outlook released today, the OECD said the level of uncertainty surrounding the U.S. economy was high and risks were heavily tilted to the downside.
“Negative spillovers from the turmoil in European markets could be greater than expected and have the potential to derail the recovery in activity and renew fears among financially fragile households and businesses,” according to the report.
So far, analysts and some Federal Reserve officials have played down concerns that the euro zone debt crisis will hit the broader economy hard.
One reason they cite is that U.S. exports to the euro zone account for only about 2 percent of gross domestic product, so the pain from the region’s fiscal crisis will be transmitted mostly through declining stock prices.
The OECD forecast U.S. growth of 1.7 percent this year, picking up to 2 percent in 2012, Reuters said.
In the event of a shock from the debt crisis, the OECD recommends easing fiscal tightening by prolonging extended unemployment benefits and increasing access to income tax credits and food stamps.
Trending News
