The U.S. is feeling the aftershocks of the Japanese earthquake and tsunami in several ways, some good, some bad.
While the U.S. stock markets fell, the price of oil was also dropping even as the demand for raw materials to rebuild Japan is likely to rise sharply on top of already rising global demand.
With all the American investments in Japanese companies, Wall Street was the first to feel the pain as it reacted to the Japanese markets, which plunged 16 percent in just two days.
“If there's going to be some damage to our economy probably it will occur most directly more quickly through the stock market, says Mark Zandi, chief economist with Moody’s Analytics.
And much of that damage could come as a result of the economic question marks surrounding the disaster.
“Investors don’t like uncertainty and an event like this in Japan creates lots of uncertainty,” said Terry Miller, Director of the Center for Trade and Economics at the Heritage Foundation.
One of the first impacts of the catastrophe was on the price of oil because Japan is the world's third largest consumer, behind the U.S. and China. Michael Auslin of the American Enterprise Institute says not to underestimate what a drop in Japanese demand could do to worldwide demand.
“This is one of the most motorized societies on earth and its one that burns an-an incredible amount of oil just to keep the 125 million people uh productively employed.”
But Zandi warns despite the fact Japan’s crippled economy has left more crude on the market and pushed prices down, a rebuilding of the Japanese economy could end up pushing prices on other commodities up.
“Of course it's been a run up in oil and other commodity prices that's been a very significant problem for the U.S. economy. So this will take some of the edge off,” Zandi says. “[The] problems in Japan will put upper pressure on oil and natural gas and other commodity prices down the road.”
In the meantime, The devastation in Japan will require massive rebuilding, and rising demand for all kinds of raw materials.
Michael Auslin, the Director of Japan studies at the American Enterprise Institute, says “ you're going to have to rebuild roads, airports, buildings, farms, ports, just about everything you can imagine.”
And that will drive up demand -- and prices -- for everything from cement to plastics to steel. Fortunately, the U.S. produces many of those products.
“So in fact our exports may get a lift from reconstruction activities, says Zandi.
The same is true for food, because many agricultural areas in Japan were wiped out. Auslin says “ it's going to further drive prices up around the globe and drive them up in Japan.” Prices were already rising because of growing developing economies such as China and India.
So things such as wheat and soybeans, for instance, will face growing demand, but again the U.S. is an exporter.
The disaster in Japan has also forced several Japanese auto plants to shut down indefinitely, but analysts see little impact here at home, even for their American plants. They get only get 20 percent of their components from Japan and most are produced in areas untouched the earthquake or tsunami.
Japan has also been the second largest lender to the U.S. Now it will be spending more money at home and presumably lending less, so credit markets could tighten. That means the U.S. might face higher interest rates on its insatiable appetite for borrowed money.
Jim Angle currently serves as chief national correspondent for Fox News Channel (FNC). He joined FNC in 1996 as a senior White House correspondent.