Academic journal article ABA Banking Journal

States' Exposure to Europe

Academic journal article ABA Banking Journal

States' Exposure to Europe

Article excerpt

The growing financial turmoil in Europe has raised questions about how the U.S. economy will be affected. While the effect of a European recession on the U.S. economy as a whole may be relatively modest, there are some states that may be more vulnerable on the basis of goods exports to Europe as a percentage of GDP.

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Overall, only 1.97% of U.S. GDP is dependent on European goods exports. However, the map shows that the effect on a handful of states will be more severe.

Among the states with the highest exposure to Europe are Utah, South Carolina, West Virginia, and Louisiana. The common thread among many of the top states on the list: They are exporters of commodities.

Utah's gold and silver exports account for the largest share of the state's total exports at 52%. Although the state relies more on European exports than any other state, with 5.56% of Utah's economy tied to exports going to that region, the United Kingdom accounts for the bulk of that trade.

West Virginia also is among the states that will likely be affected due to commodities exports to Europe, particularly in coal production, with nearly 4% of the state's economic growth tied to Europe. Demand for coal tends to move closely with GDP growth, so some softening in sales seems likely. Demand has increased over the past year, however, as Germany has stated its desire to move away from nuclear energy. …

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