FILE – In this March 9, 2011 file photo, Whirlpool Corp. CEO Jeff Fettig speaks in Detroit. Fettig said in October that demand is tumbling in parts of Europe. Whirlpool cut its earnings estimates and said it would lay off 5,000 workers in North America and Europe. (AP Photo/Paul Sancya, File)
NEW YORK (AP) — [auth] The tremors from Europe’s financial upheaval have reached U.S. shores, rattling consumers and companies.
The consequences have been limited so far. Yet the United States and Europe are so closely linked that any slowdown across the Atlantic is felt here. U.S. makers of cars, solar panels, drugs, clothes and computer equipment have all reported effects from Europe’s turmoil.
Worries that Europe’s crisis could worsen and spread are spooking investors and consumers just as the holiday shopping season nears. Some fear U.S. consumers could rein in spending. Europe’s sputtering growth is already dragging on some U.S. companies’ profits and could further slow the U.S. economy.
The crisis “seems to be coming to a head right at the time the U.S. economy is at its most vulnerable,” said Mark Vitner, an economist at Wells Fargo.
It’s affecting companies like Marlin Steel Wire Products, a 34-employee business based in Baltimore that’s been seeking a $4 million contract from a German manufacturer for an industrial steel wire project.
Marlin’s CEO, Drew Greenblatt, says the German firm is in “pause mode” because of Europe’s turmoil. The German company had promised the order by early November.
Marlin’s overall sales are growing briskly. But sales to Europe have been sinking.
“If they were ordering like they customarily do, we would have hired more guys,” Greenblatt said.
The European Union is the No. 1 U.S. trading partner. Nearly $475 billion in goods crossed between the regions in the first nine months of 2011. About 14 percent of revenue for the 500 biggest U.S. companies — roughly $1.3 trillion — comes from Europe.
The U.S. economy is especially vulnerable to the European crisis because it’s growing so weakly and facing other risks, such as weak hiring, stagnant pay, high energy costs, a wide trade deficit and potentially steep government spending cuts.
“It won’t take much to tip us into another recession,” said Sung Won Sohn, an economics professor at California State University, Channel Islands. “If Europe gets into any deeper trouble, it will take us and the rest of the world down, too.”
The European Union said last week that the region could slip into a “deep and prolonged recession” next year. The Eurozone is expected to grow just 0.5 percent in 2012. That’s far below the 1.8 percent growth predicted in the spring.
Wells Fargo estimates that the U.S. economy will grow 2.1 percent next year, 0.4 percentage point lower because of Europe’s slowdown. Goldman Sachs thinks the region’s slowdown could shave a full percentage point off U.S. growth.
Even if Europe doesn’t fall into a downturn, its turmoil is affecting U.S companies and consumers in several ways:
— Stock-market gyrations unsettle consumers and make them more cautious about spending.
— U.S. companies with big European operations are suffering from lower sales, prices and profits.
— Banks worldwide are cutting lending and hoarding cash to create more cushion for potentially deep losses on their holdings of Greek, Italian and other government debt. U.S. and overseas banks are keeping about $1.57 trillion in reserves at the Federal Reserve — a jump of nearly $580 billion in the past year.
— Uncertainty about how much damage Europe could cause is making corporations reluctant to spend their piles of cash to hire and invest.
Not every U.S. company is hurting in Europe, of course. McDonald’s Corp., Kraft Foods Inc., Sara Lee Corp. and Oracle Corp. recently reported strong results there. But General Motors Co.’s third-quarter profit fell 15 percent, due mainly to slower sales and higher costs in Europe.
“Things have clearly deteriorated,” GM Chief Financial Officer Dan Ammann told investors last week.
Jeff Fettig, CEO of Whirlpool, said late last month that with demand tumbling in parts of Europe, the company plans to lay off 5,000 workers in North America and Europe.
First Solar, based in Phoenix, is postponing plans to finish building a solar panel factory in Vietnam because of a worldwide glut in panels. The glut has been caused by falling demand in Europe, the world’s biggest solar market.
Falling prices caused by the glut have sent share prices of established solar panel makers such as First Solar and SunPower tumbling. They’ve also forced some solar companies such as Solyndra into bankruptcy protection.
Abercrombie & Fitch Co.’s struggles in Europe caused its share price to plummet. Nike Inc. said its last quarterly revenue rose in every region it operates in except Western Europe.
Cisco expects growth in the area to slip about 5 percent during the next three months.
“Europe, we think, is going to be a challenge for us for this next quarter,” Cisco CEO John Chambers told analysts Wednesday.
Smaller businesses are being affected, too. Wine exports are suffering because of poor consumer sentiment in Europe and because a weak euro is making U.S. wine costlier by comparison. The European Union accounts for about 38 percent of U.S. wine industry exports.
For banks, the crisis is different, and scarier. They hold debt of European governments and companies that could lose value if the crisis worsens.
The big fear is that big U.S. and European banks would become so worried about each other’s ability to cover losses that they’d stop lending to each other. The result could be diminished confidence that would freeze lending and shock the global economy.
Last week, Federal Reserve Chairman Ben Bernanke told soldiers and their families in Texas that Europe posed a “significant risk” to the U.S. economy.
Europe’s troubles have been weighing on U.S. stock markets for months. David Hensley, a global economist at JPMorgan Chase, noted that falling stock prices make consumers feel less wealthy and cause some to cut back on spending. That, in turn, slows U.S. growth.
The unease is growing right as the holiday shopping season — which accounts for up to 40 percent of retailers’ annual sales — is about to start.
“The retail industry is hyper-sensitive to any sort of national or international crisis that affects consumer confidence,” said Brian Dodge of the Retail Leaders Industry Association. “Consumers read the news.”
Rugaber reported from Washington, Liedtke from San Francisco. AP Business Writers Tom Krisher in Detroit, Sarah Skidmore in Portland, Ore., and Martin Crutsinger in Washington contributed to this report.