The impact of the euro crisis on the US economy

While much of the focus this week has been on the fallout from last week’s summit of European finance ministers, a House committee turned its attention to the impact of the euro crisis on the American economy.

On the first day of testimony, Bert Ely, head of Ely & Co., warned that the euro crisis could trigger a global economic slowdown which, given the “interconnected nature of the global economy,” could send the US into recession and would certainly increase the already large US budget deficit.

Most of the witnesses on the first day of hearings aimed their criticism at the Federal Reserve and European central banks, William Dudley, President of the New York Federal Reserve Bank, argued that the Fed has limited ability to affect events.

He told the House Committee on Oversight and Government Reform that he did anticipate the Fed taking further action.

“At this time, I do not anticipate further efforts by the Federal Reserve to address the potential spillover effects of Europe on the United States, we will continue to monitor the situation closely,” said Dudley.

Read testimony from the full panel of witnesses from the first hearing.

Read the testimony from the second hearing.

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