Greek debt crisis: What does it mean for the US?

On Tuesday as the news spread that Standard & Poor’s had downgraded the government of Greece’s debt to “junk” status, the US stock market stumbled.

Again, on Wednesday, the market’s gulped as Spain’s debt was downgraded. But by the end of the day, the Dow Jones Industrial Average had shrugged off the news, closed up 53.28 points at 11,045.27.

Other than the stock market, what other affect could Europe’s debt crisis have on the US economy?

At the moment, economists believe the fallout from Athens's or even Madrid’s financial problems may have only a modest impact on Main Street.

• Some US companies that export to Europe may have a harder time competing if the Euro continues to weaken.
• A stronger US currency might cause some German or French tourists to reconsider a trip to New York or Miami.
• US banking regulators will be questioning the largest banks to determine how much they could potentially lose if a European nation somehow defaulted on its debt.

IN PICTURES: The top 10 things Greece can sell to pay off its debt

“At the moment it’s something we need to watch but not fear,” says Nariman Behravesh, chief economist at IHS, Inc., an economic research company in Lexington, Mass. “The US is growing almost three times as fast as Europe and the biggest impact is likely to be as Europe grows slowly, our exports to them grow slowly.”

How big a trading partner is Europe?

The slow growth may come about since economists expect European nations, such as Greece, Portugal, Spain, and Ireland to cut spending and perhaps raise taxes.

“Raising taxes and cutting government spending means relatively weak economic growth,” says Jay Bryson, international economist at Wells Fargo Economics in Charlotte, N.C.

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