Is 2012 the year the European recession reaches American shores?
As many political and economic analysts peer into 2012, most do not foresee Europe’s leadership taking the strong steps needed to resolve the European debt crisis. And without a solution, most see the debt contagion spreading across the Atlantic to negatively impac the US economic recovery.
But Douglas Elliot of the Brookings Institution breaks from the conventional wisdom in arguing that it is not likely that the US will fall back into a recession.
Elliot draws a comparison between the debt ceiling debate, which at one point seemed to be a problem without a solution, and the political infighting presently coloring relations in Europe.
“Indeed, another parallel is that there were a fair number of voices saying it would be good to let the process fail in order to force a more dramatic restructuring, just as there are voices urging Europe to downsize the eurozone and accept national defaults in the weaker countries. As with the debt ceiling debate, reason is likely to prevail with the joint interests of the eurozone countries served by an eventual comprehensive and effective accord,” says Eliot.
Read more of Elliot’s article on why America will be spared from a recession.