Greece’s expected default today on its International Monetary Fund loan payments and the resulting meltdown of its financial system and economy are dire, but they probably won’t have a huge negative impact on the U.S. economy, analysts say.
“Greece’s ties to the U.S. economy are negligible; the country accounts for less than 0.1 percent of U.S. exports. Similarly, there is little exposure to Greece’s financial woes: U.S. banks only have exposure to around $13 billion of Greek debt, just 0.4 percent of consolidated foreign claims. Therefore, assuming the problems are confined to Greece, the ongoing crisis will have a minimal impact on the U.S. economy,” said Kurt Rankin, economist at PNC Bank.
Despite its diminutive global economic impact, Greece is weighing on investors’ minds and has compounded with tame year-to-date equity returns and the looming Federal Reserve rate hike, said Rob Haworth, senior investment strategist for U.S. Bank Wealth Management.
There is concern Greece’s problems could spread to the rest of the Eurozone, and a potential dissolution of that partnership could couple with a European financial crisis to put a little pressure on the U.S. economy, Rankin said.
“U.S. financial markets are likely to remain volatile in the near term, with the S&P 500 down about 2 percent today,” he said. “But this needs to be placed in context; U.S. stock prices are up by more than 200 percent in the current cycle.”