How Europe's Contagion May Hit the U.S. Economy

On Friday evening, June 1, about 350 people gathered in a high-ceilinged room at the Chicago Cultural Center, sipping wine as songs by Sister Sledge and Kool & The Gang played in the background. The $2,500-a-ticket-and-up fundraiser was one of six President Barack Obama held across the Midwest that day. That morning the Department of Labor had released the worst employment report of the year, showing the economy added just 69,000 new jobs in May. The culprit, in the president’s eyes, was Europe. “A lot of that’s attributable to Europe and the cloud that’s coming over from the Atlantic,” he told the crowd. “The whole world economy has been weakened by it, and it’s having an impact on us.”

Parsing out the exact impact of the European crisis on the U.S. economy can be difficult. There’s a strong chance that Europe can wound the U.S., and the cumulative effect could be drastic. The danger doesn’t come from where you would expect—exports from the U.S. to Europe. Though turmoil in the region certainly poses a risk to U.S. exporters, for the first quarter U.S. exports to Europe were up more than 8 percent, to $86 billion. Total exports account for only about 14 percent of U.S. gross domestic product, a small fraction of which go to Europe.