Europe’s Woes Pose New Peril to Recovery in the U.S.

By ANNIE LOWREY
NYT

WASHINGTON — For the second time in two years, European debt troubles threaten to slow the momentum of the fragile recovery in the United States.

Although American financial institutions have taken steps to protect themselves from Europe’s long-simmering problems, the likely slowdown in Europe could damage consumer and business confidence in America and strengthen the dollar, making United States exports less competitive.

“Financial contagion can lead to the very rapid global spread of recession,” said Chris Varvares, senior managing director for Macroeconomic Advisers, a forecasting company. “If trouble intensifies and spills over to equities and other U.S. risk assets, we could see a soft patch.”

Economists say Europe’s troubles would need to worsen significantly before putting the United States economy, which has been strengthening lately, at risk of a new recession.

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