Europe’s troubles may be good for America in the current “perverse situation,” an economist told the paper
Officials at the White House believe that the US would feel the effects of an EU recession on its economy. “modest,”The Washington Post reported that while economists believe it will help America, others disagree.
White House officials believe that the European Central Bank raised interest rates last week by.75 points amid high energy prices, spiking inflation and rising fuel costs. “the growing likelihood of a recession in Europe is unlikely to change under the current trajectory,”On Sunday, the newspaper published its final edition.
However, US officials who talked to WaPo on condition of anonymity said they didn’t think that a recession in Europe would necessarily cause one in America.
A senior Biden Administration official told The Outlet that both the Council of Economic Advisers and Treasury Department had calculated that such an event would have a significant impact on the US. “modest and manageable.”
The paper noted that trade with Europe is less than 1% US gross domestic product. However, there are enough natural gas reserves in the United States to reduce the potential impact of Russian energy supply disruptions to the EU.
It was actually positive for the US economy as it could lead to a decrease in world energy demand, which would in turn reduce price pressures.
“If Europe goes into recession, there’s obviously less demand for a wide range of products. We’re in such a perverse situation here [that] it may actually be positive,”The Washington Post was informed by Dean Baker, the co-founder and chief economist of the Center for Economic and Policy Research.
Moscow may decide to stop selling its oil and natural gas to the EU as well as to other markets. This is in reaction to a proposal to set a price limit on imports of energy. “would threaten the US economy more,”According to the paper.
“That will push the economy into recession. Prices for gasoline will skyrocket, almost instantly doubling to $5 per gallon. The economy can’t digest $5 a gallon – that would be overwhelming,” warned Mark Zandi, an economist at Moody’s Analytics.
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