The Japanese Quake-Tsunami-Fukushima Event Its Effect on the US Economy
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The Japanese Quake-Tsunami-Fukushima Event Its Effect on the US Economy

The overall economic impact of the JapaneseÂ’s Quake-Tsunami-Fukushima event will probably be short lived with the exception of environmental and safety concerns.

March 11th, 2011 may go down as one of those dates forever etched in our psyche, if not the world certainly for the peoples of Japan. Like the most recent oil spill in the Gulf of Mexico it is certain to have an altering effect on how the public struggles with the dichotomy of the dangers and cost to mitigate the same versus economic national interest and environmental safety. Certainly the importance of risk management in offshore oil drilling and the nuclear power industries have taken on epic significance with these two events. There is an unsettling profoundness attached to the safety of these industries over the long term. The impact on our quality of life and marine life may well be with us far into the future. If so the economic consequences could be immeasurable.

The economies of scale and the safety issues will be with us long term but even with this looming overhead there are some short term effects worth noting. The United States and Japan are the best of trading partners. The international commerce between the two nations per year total well over $150 billion dollars. For example, the auto industry may see some shortages in parts being delivered from Japan. Ford and GM may realize some short term gains in the hybrid market. Due to Toyota’s cut back on exports like the Prius.

Also, Japan is perhaps the third largest producers of semiconductors behind the United States and South Korea. This industry has been known to operate below capacity in the past but with the new appetites of China and India there may be a temporary drop in semiconductor supplies around the world.

Then there are the Financial Markets which are a little tricky. The dollar has been steadily losing ground internationally. The yen has been no exception. See graph below:

                   

The graph shows after March 11th the decline in the dollar against the yen stopped and to some extent the trend reversed. This too is thought will be short lived.

Hawaii and Japan have long had a unique relationship. Many of the people on the island share a common heritage. Ethnic minorities make up 75% of Hawaii of which 55% are Asian. As a result there is a lot of cultural overlap as well as shared commerce. No where is this more evident than in tourism and in real estate. People visit the island. They enjoy the way of life, the beaches, and the hospitality of the Hawaiian people and want to come back. This gets reflected in real estate purchases. The island was recovering and experiencing an increase in tourism. This more than likely will undergo a temporary setback because of the March 11th event.

The overall economic impact of the Japanese’s Quake-Tsunami-Fukushima event on the US Economy will probably be short lived with the exception of environmental and safety concerns. The US economic recovery will probably be more negatively impacted in the short term by rising oil prices which some blame on Wall Street speculators and the partisan political bickering in Washington between the GOP and the Democrats over the much anticipated 2012 presidential election than the events going on in Japan.

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