U.S. Economists Fear Spillover from Japan

Over one third of the 72 economists polled expected U.S. firms to face higher costs for raw materials as Japan looks to rebuild quake and tsunami-battered regions.

Turmoil in Japan could spell higher costs and choppy sales for U.S. firms, according to a survey of trade economists published on April 18, showing jitters and uncertainty about impact of the crisis.

Businesses can expect to see a significant spillover from the triple disaster this year and next, but with the impact varying vastly from sector to sector, according to a survey by the National Association for Business Economics.

Over one third of the 72 economists polled expected U.S. firms to face higher costs for raw materials as Japan looks to rebuild quake and tsunami-battered regions.

While the crisis has eased Japanese demand for materials in the short-term, that is expected to rebound strongly up as the country rebuilds.

But that rebuild is also expected to provide a boon for the U.S. construction sector.

While some sectors can expect to see a drop in sales, 22% of those working in construction, manufacturing and other goods production predicted that increased Japanese demand would boost their exports this year and next.

But the slowdown in Japanese manufacturing is also being felt.

Nearly one in five economists in the transportation sector said the slowdown in parts from Japan would hit their output. Twenty-six percent of other manufacturers predicted an adverse impact.

Overall "recent developments in Japan led 40% of panelists to reduce their expectations for real GDP growth in 2011," the NABE said.

But Japan's economic problems are unlikely to derail the U.S. recovery.

"Despite geopolitical concerns, higher oil prices, and uncertainties created by the disasters in Japan, the (U.S.) economy continues to recover," said Shawn DuBravac for the Consumer Electronics Association.

Copyright Agence France-Presse, 2011

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