For those of you who haven’t been following the ongoing debt drama in Europe, things aren’t looking good on the other side of the pond.
Europe’s gross domestic product grew by just 0.2 percent during the third quarter of 2011 – mirroring its weak second quarter performance. Meanwhile the sovereign debt owed by Greece, Italy, Portugal and Spain is simply too much for the European Central Bank and the International Monetary Fund to cover – although that’s not stopping them from trying to get U.S. taxpayers to shell out tens of billions of dollars on another global bailout of the Eurozone.
But beyond government spending more borrowed money on bailouts … Europe’s problems aren’t our problems, right?
In the increasingly likely event that Europe plunges headlong into another full-blown recession, South Carolina is likely to suffer more than most states.
According to a new Wells Fargo report, European exports make up 4.1 percent of our state’s economy – the second-highest percentage in the entire nation (Utah relies on European exports for 5.5 percent of its exports). More ominously, the slowdown is expected to hit the specific industries our state has opened the saddlebags to attract here … the automotive and aircraft “clusters.”
“Areas likely to be affected by a European recession include states that export automobiles and automobile parts along with aircraft and aircraft parts,” the report notes. “South Carolina and Alabama are among the auto producing states that have somewhat strong ties to Europe.”
And while aircraft orders aren’t expected to suffer in the short-term, “automobile producing states, on the other hand, will likely face some slowdown in the pace of output as European demand for automobiles slows.”
Three months ago another Wells Fargo report indicated that South Carolina – which has the third-highest unemployment rate in America – was one of a dozen states that had officially slipped back into a recession. Assuming Europe crashes, we may not be slipping out of that recession anytime soon …