Only a handful were scattered throughout the store — and most were just browsing. “I would have liked to buy lots of things, but I have no money,” sighed Nacho Corral, a 37-year-old government worker whose salary was recently cut 7 percent along with those of other civil servants.
The eerie emptiness of the store, in an upscale shopping mall in Madrid, is an indicator of the growing severity of the impact of the European financial crisis on U.S. companies.
In the latest series of earnings announcements from U.S. corporations, top American brands such as Whirlpool, Ford, General Motors, Starbucks and Apple have reported disappointing revenue because of Europe’s troubles. These results, over the past two weeks, have heightened concerns on Wall Street about the health of U.S. business.
The ripple effects of the European financial crisis, like its roots, are complex, but the impact on European consumers may be one of the easiest things to understand. As unemployment rates have soared — to a high of 11.2 percent in the euro zone as of Tuesday — consumer spending has plummeted. Surveys show that many Europeans, regardless of whether they have a job, have become increasingly uncertain about their economic future and are holding off on purchases of big-ticket items such as cars and appliances as well as splurges such as tech gadgets or an extra cup of coffee.
Their reluctance to spend has become a drag on U.S. corporate profits and a problem for President Obama as he seeks to keep the American economy growing in the run-up to the November election.
Adding to the unease was the announcement Thursday by Europe’s top central banker, Mario Draghi, that he wasn’t ready to take new steps to address the euro zone’s escalating debt crisis. While Draghi, president of the European Central Bank, said he was preparing to take new measures for the future, the lack of action caused stock markets on both sides of the Atlantic to fall, with the Dow Jones industrial average losing about 0.7 percent.
Losses for manufacturers
There was also troubling news from GM, which reported Thursday that it had lost $361 million in Europe in the second quarter, compared with a profit of $102 million in the same quarter last year.
The latest round of discouraging reports started last week, when the world’s largest appliance maker, Whirlpool, said its sales fell 7 percent in Europe, the Middle East and Africa from 2011. As a result, overall sales were down more than expected.
The next day, Ford announced that its total profit in the second quarter had fallen 57 percent. The company said it had lost $404 million in Europe, compared with a profit of $176 million in the region during the same period last year. Ford’s forecast for the near future was even gloomier: It doubled its expected losses in Europe, where auto industry sales are at their lowest in almost 20 years.