The euro zone crisis is very bad news for the people of the region, especially in the peripheral countries where unemployment is soaring well into the double digits. However its impact on the economic situation in the United States has been hugely exaggerated, as in this NYT article that told readers:

"With his own re-election chances directly tied to the European economic crisis as it drags down growth in the United States, Mr. Obama desperately wants Ms. Merkel to loosen the reins on spending and the austerity programs that have been imposed on Greece and the other struggling euro zone economies."

In fact, exports to the euro zone countries are less than 1.5 percent of GDP. Even if these were to fall by 10 percent (a huge decline) it would have only a minimal impact on growth in the United States. Also, the euro zone crises has helped to lower interest rates in the United States as investors turn to Treasury bonds as a safe haven. This has had a modest positive impact on growth in the United States.

Of course the situation would be different if there were a complete meltdown in the euro zone. This could lead to a Lehman-type financial crisis, which would be a serious hit to growth.

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