Janet Yellen, The Chief and top monetary policy setting executive in US Central Bank said, "It would negatively affect financial conditions and the U.S. economy." She was sure of such possibility since the US governmens seem to already be facing the decision's headwinds. The impact has indeed begun.
The trade between US and UK may only make up to 0.5% of the US economy activity. However, the direct trade between both countries has run well for centuries. When Brexit took place, there is a possibility that this would highly impact the US economy and cause economic lows. Here are some of them the significant changes that may occur:
1. Brexit May Not Only Happen To The UK
According to CNN Money, as the UK leaves the EU, other countries may follow the direction. A similar decision may be taken by France, Italy, and Netherlands. This will cause market confusion as the global market has acknowledged the use of Pounds by the UK.
However, if more EU countries raise "the Next Brexit", one individual country may apply its own currency. EU market uses Euros. For instance, if France separated, it can possibly re-introduce and reuse its old currency.
2. It Slows Down The US Market Growth
Brexit has caused extreme volatility in the global stock market. If this effect continues for weeks and months, then US market growth is in danger as well. Investors will reconsider their buying plans or worse decrease their spending since the US economy will experience hard transition. Having fewer people spend money, market growth will also be slow down.
"The keys to whether the U.S. economy is affected significantly will be whether equities tumble enough to have a major impact on business and consumer confidence," says Jim O'Sullivan, chief U.S. economist at High-Frequency Economics, a research firm.
3. It Impacts Strength of the Dollar
Some travellers can benefit from this aspect. They could buy everything cheaper. On the other side, it is bad news for every business which sells goods overseas. As of Friday morning (24/7), the US dollar quickly competed with the UK pounds with a 6.3% increase. If this number keeps rising, American overseas businesses may drop their profits for weeks or months.
