How Will the Japan Earthquake Affect the U.S. Economy?

It's still too early to measure the entire effect of Japan's earthquake on the U.S. economy. A few things, however, are all but certain.

Companies that export goods and services to Japan will not necessarily be badly hurt. U.S. goods exported to Japan totaled $51 billion in 2009, according to the Office of the U.S. Trade Representative.

The top exports to Japan were optical equipment, aircraft, machinery, and cereal. Japan's need for machinery and cereal may rise -- at least short term -- as the country rebuilds infrastructure and deals with food shortages.

U.S. goods imported from Japan totaled $96 billion in 2009. Japan's largest export to the U.S. is cars. U.S. manufacturers like Ford Motor (F) and GM (GM) may get short-term benefits from a slowdown in exports by Toyota Motor (TM), Honda (HMC), and Nissan.

Japan may also be badly hurt as foreign investment falls on concerns about risks. There will be a migration from Japanese equities and bonds. Some of this capital may seek the safe haven of the U.S. equity markets and treasuries. The value of American stocks could actually rise for a time. This could be particularly true for shares of companies that have powerful and direct competition in Japan, like Caterpillar (CAT) and Eastman Kodak (EK).

There is also likely to be upward pressure on the prices of consumer electronics in the U.S. due to shortages of components made in Japan, such as flash memory. There may also be disruptions in the supply of parts for devices like the Apple (AAPL) iPhone and iPad.

Expectations that production problems for such a major U.S. trade partner as Japan would benefit American companies may not be met.


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Mr Pussy Lover

I didn't see 1 ford floating in that **** colored water. Stocks get spooked because it gives them justifcation to seal the investors money ... opps I told you it might be risky.... There all crooks stock brokers are like lawyers throw them in the tsunami the world would be a better place

March 15 2011 at 11:21 AM Report abuse +1 rate up rate down Reply
MSmailbox

I look for this disaster to stimulate the U.S. economy. Unfortunately, it takes something aweful, to get things moving, again. Usually, that's meant a war, but in this case it was Mother Nature. If you want a historic pattern, look at the US, following WW-II. I don't think that it will be so severe as WW-II, so far as the number of lives that are lost, but the reconstruction will be substantial. Figuring out which industries and companies will benefit and those which you support, morally, is the trick. Again, I am sorry that it takes such a terrible toll of human suffering, but I've shared in that myself, so I might as well share the new life that will grow up from the ashes. The only way to play a part is to be involved in equities. Sitting on gold, doesn't help, or make you a better person.

March 14 2011 at 11:32 PM Report abuse rate up rate down Reply
rskillsta

Of course, this will affect U.S. economy. Obama will spend more in rebuilding Japan's economy than he will on America's collapsed economy. You can't play war in Libya and keep Bush tax cuts going forever and save Japan at the same time. America will look like a disaster on scale of Japan now by spending billions it isn't taking in.

March 14 2011 at 11:05 PM Report abuse +3 rate up rate down Reply
pbsasko

Every day another "chicken little" comes out to scare "the herd".

March 14 2011 at 4:43 PM Report abuse +1 rate up rate down Reply
mr8pak

In 2004, an Asian tsunami killed 230,000 Asians within 2 days and the region recovered in 1 year! In 2005, Hurricane Katrina killed 1,800 people in the New Orleans/Mississippi area and it took 5 years to recover. The reason why it took 5x longer for America to recover from Katrina is because many locals sat around calling President Bush a racist; Illegal aliens had to be imported to rebuild while able bodied locals watched; The mayor talked about rebuilding a Chocolate City while the free Katrina Debit Cards were abused, and the American WELFARE plantation was exposed. When disasters strike, rarely will you see the welfare freaks helping. After an earthquake hit Haiti in 2010, the World issued 5 billion dollars, along with countless volunteers. Meanwhile, half the locals sat around! Here is the conclusion. The higher the morals and lower the welfare types, the faster the recovery time in an area and the less aid needed. JAPAN will re-build fast because it is 100x more moral than Haiti.

March 14 2011 at 3:32 PM Report abuse +6 rate up rate down Reply
1 reply to mr8pak's comment
ajax

I remember Hurricane Andrew which hit New orleans as well as South Florida.
I knew some people in a church group in Denver that volunteered with Habitat for Humanity to go down there and help them rebuild. When they got there they noted that all the building materials that everyone and the HFH donated was sitting there warped and rotting.
They pitched in while the locals sat there and watched them without lifting a finger.

March 15 2011 at 12:17 AM Report abuse +2 rate up rate down Reply
fpfp040408

Apple & Berksire

March 14 2011 at 3:00 PM Report abuse -1 rate up rate down Reply
fpfp040408

Close week ending March 11, 2011 - Gold DOWN => .48% Silver UP ==>> 1.90% ! Silver currently is way outperforming gold. Gain/Loss On Week Gold $1421.00 +$8.10 -0.48% Silver $35.95 +$0.68 +1.90%

March 14 2011 at 2:54 PM Report abuse +1 rate up rate down Reply
kawieboy

What a stupid article....no one comes out ahead when a country practically gets knocked off the map. Destroying the idiotic unions would help American manufacturing a lot more than destroying Japan.

March 14 2011 at 2:47 PM Report abuse rate up rate down Reply
1 reply to kawieboy's comment
Chuck Crow

Amen brother amen

March 14 2011 at 3:29 PM Report abuse +2 rate up rate down Reply
gr8handz

The author of this article failed to take into account the fact that the economic impact will go beyond the items he talked about. There will be an impact on materials available at your local hardware store. Items such as plywood and other construction materials. And let's not forget what will happen to food prices. There will be a call for nonperishiable items such as packaged rice meals and the like, which will drive prices that were already headed up because of fuel prices. After every disaster where there is substantial destruction of housing and the like these items go up in price. And that has a bigger impact on our economy than the loss of access to electronic equipment.

March 14 2011 at 2:27 PM Report abuse +2 rate up rate down Reply
amfnvf

When are you going to wake up to the fact that American corporations have factories in China. When American labor is forced to work for Chinese wages Ameican Corporations will build factories over here. We are getting closer everyday to that reality.

March 14 2011 at 1:47 PM Report abuse +2 rate up rate down Reply