NEW YORK, Nov. 12 (UPI) -- The debt crisis in Europe could jump the Atlantic Ocean and severely affect the U.S. economy, private sector analysts and U.S. officials said.
"Financial contagion can lead to the very rapid global spread of recession. If trouble intensifies and spills over to equities and other U.S. risk assets, we could see a soft patch," said Chris Varvares, senior managing director for Macroeconomic Advisers, The New York Times reported Saturday.
"I don't think we'd be able to escape the consequences of a blowup in Europe," Ben Bernanke, the chairman of the Federal Reserve, said Thursday in Texas.
There are several ways the European crisis could rattle the U.S. economy. First, the euro has been dropping in value, which means the U.S. dollar is stronger.
That makes U.S. exports more expensive overseas.
Secondly, if Europe goes into a recession, it is certain Europe would be buying fewer American goods.
The European Commission this week projected the eurozone's economy would grow 0.1 percent in the fourth quarter, while the economy of the 27-nation European Union would be flat in the final three months of the year.
"We've had such strong exports to Europe and now, with the European financial crisis, those will come down, appear to be coming down," said Commerce Secretary John Bryson.
In addition, U.S. banks hold billions of dollars of European debt. The Congressional Research Service in September reported U.S. banks held $641 billion in European debt.
"A collapse of a major European bank could produce similar problems in U.S. institutions," the report said.
