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Euro turmoil could cause havoc on U.S. exports

11 Nov

Experts fear Europe’s debt crisis could take a bite out of U.S. exports, despite a record 180.4billion dollars sold by companies in foreign sales seen in September.

The Commerce Department credited rises in industrial supplies and consumer goods, such as clothes and toys, in the month retailers start preparing for the holiday season.

However, economists think the current level of exports is unsustainable amidst the turbulent times in Europe.

Paul Dales, an economist with Capital Economics, said: “I just can’t really see exports continuing to perform as well as they have done. It’s pretty clear that things aren’t going well from a trade point of view, and that the slowdown in the euro zone is starting to have an effect in the U.S.”

President Obama put emphasis on U.S. companies exporting to Asia as a solution. However, it is feared the debt problems in Europe could have a “knock on effect” in emerging markets such as China, Europe’s largest trading partner.

Menzie Chinn, economics professor at the University of Wisconsin, said: “If you have a big financial conflagration, that has repercussions that are extremely hard to predict.”

China is very important to American companies; the U.S. Exports 100 billion dollars worth of goods and services to China each year, making it their third largest export market.

Sales with the Chinese market result in jobs being created in American. Jobless claims reached a seven month low in the third quarter, which showed signs of the U.S economy on the road to recovery. If China are heavily affected by Europe’s debt crisis, the gradual economic recovery in the U.S. could be hurt.