Japan Earthquake to shake the U.S. Economy

The devastation to Japan is unimaginable.  Most of us have been riveted to our news sources, seeing horrendous photos of damage and destruction.  But one angle some economists are beginning to ascertain are the ramifications of that disaster to us here in the U.S.

I’m not talking about radioactive fallout from the nuclear plants, I’m talking about the economic shake-up it is sure to deliver to our already weak and struggling economy.

John Talton of the Seattle Times (March 21, 2011) wrote an article titled A devastated Japan overwhelms conventional economic expectations where he states, “Exports will slow. Japan will not be the big buyer of U.S. Treasurys it has been in the past, and may indeed be forced to sell some of its holdings to pay for reconstruction.”  He goes on to say that “This could have a destabilizing effect on the continuing trade and debt imbalances between America and Asia, and complicate the Federal Reserve's delicate effort to stimulate the economy without seeding dangerous inflation.”

USA Today (March 15, 2011) article Devastation in Japan could affect economies worldwide by By Gary Strauss, Mike Snider, Paul Davidson and Matt Krantz, states that “Already, the turmoil in Japan is affecting U.S. companies, investors and consumers, threatening disruptions in the flow of products and parts used to manufacture everything from Apple iPads to Sony televisions.”  The article states that the Toyota plant in Kentucky has begun cutting overtime shifts over concern of supplies from Japan.

We truly are linked to nearly every nation on earth, some more than others.  When disaster strikes, in whatever form it takes (terrorism, political/civil unrest, natural disasters, etc) it affects us.  We can no longer sit back and watch, but there will certainly be some damage to ourselves.

The world is smaller now than it used to be.

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