The actual and predicted financial fallout of Brexit for America
Posted June 28, 2016
So, it’s happened. Britain’s citizens have voted to leave the European Union in the so-called Brexit, with BBC reporting that about 52 percent voted in favor of it.
Is Brexit living up to the idea of doom for America’s economy?
Short answer: No. The Wall Street Journal reports that “the damage from the so-called Brexit alone isn’t likely to be enough to nudge the U.S. into a contraction.” So breathe a sigh of relief there.
But there will be impact. Some has already been felt, such as in the stock market.
The Dow Jones average fell more than 500 points Friday, in what Reuters called “the biggest blow to the global financial system since the 2008 financial crisis.”
Still, the drop at least wasn’t as bad as it could have been. Fortune reported before the market opened Friday that predictions were at an almost 650-point drop, which would have been “the sixth worst daily point dive in Dow history.”
“While there may not be huge economic losses from Brexit, there could be large market ones,” warned Stephen Gandel in his article for Fortune. “It already looks that way.”
However, long-term investments such as 401(k) plans look to be fine, according to aol.com, which added, "it's best to not have a knee-jerk reaction and make big changes to your portfolio."
There is some good news, at least for those who want to travel. With the British pound’s resulting devaluation from Brexit, the American dollar will go much farther in currency exchange, according to Time.
However, if you are looking to take advantage and leave for Britain, Time’s advice is to check your airline for any Brexit-related announcements, as rates may increase and routes may change.
And those who are looking to not only stay at home but perhaps buy one, mortgage rates, already at the lowest they’ve been in about three years at 3.7 percent, are expected to decline even further now, according to the Washington Post.
“If you’re a borrower, don’t wait to lock your rate,” said Greg McBride, chief financial analyst at Bankrate, to the Washington Post, “as this opportunity may not last long.”
These low-interest rates come as a result of doubts that Americans can pay off higher rates, thanks to factors foreign and domestic, said Lawrence Yun, chief economist at the National Association of Realtors, to the Washington Post.
Nothing solid has materialized yet on any observed effect to the import/export trade between America and Britain, previously reported as one of the main talking points about the Brexit debate. But The Wall Street Journal noted that with the dollar’s rise to the pound’s fall, the demand for American exports may be suppressed.
The Journal also reported the fears of U.S. officials that the country’s economy will be stunted if the EU, as America’s largest trading partner, suffers a lack of growth from Britain’s desertion.
So there have been some bad and some good, and some uncertainties still remain as to Brexit’s impact on the U.S.
Contact the reporter at email@example.com; Or follow her on Twitter at @Sarahsonofander.