Euro mess is by far the biggest risk to US outlook

There is an incredible amount of uncertainty surrounding what impact a euro-zone recession and the potential break up of the single currency could have on the US economy and financial markets. The trade links with the peripheral euro-zone countries are small, with the US less exposed than it was to either the Mexican Peso crisis in late 1994 or the Asian crisis in 1997. The financial links are also pretty limited, at least as long as the crisis is restricted to those same peripheral countries. But if the crisis were to badly damage the banking system in the core euro-zone countries, then the impact on the US would be much greater. In a worst case scenario, the collapse of the euro could paralyse US credit markets and push the economy back into recession.