BLITZER: A tumultuous day on Wall Street today. The Dow closing down just 22 points after an earlier plunge took it well below the 10,000 mark earlier in the morning. It was down at 1 point -- around 300 points.
So let's talk about this roller coaster with our senior political analyst, David Gergen -- David, you just spent some time in Europe.
We're deeply worried about Greece, Portugal, Spain, Italy. The impact of what's happening in Europe could have a -- still a very significant impact on us right here.
DAVID GERGEN, CNN SENIOR POLITICAL ANALYST, FORMER PRESIDENTIAL ADVISER: It certainly could, Wolf. And, you know, there's a parallel here between what's going on with the oil spill and what's going on the currency crisis in Europe. And that is, in both cases, our fate seems so much in the hands of people we can't control. In one case, BP, you know, and the -- and the U.S. government is having a hard time, you know, controlling that. And now, on the -- on the currency side, the United States' economy is threatened increasingly by this -- the crises that's taken over Greece. But it's spread beyond Greece now into the European community.
BLITZER: And at some point, you know, the fear is that if more banks in Europe, if the economy over there really goes into a deep recession, there will be less opportunity to buy U.S. products and that could have a spillover effect here.
GERGEN: That's absolutely right, Wolf. A couple of things. One is the exports into Europe. Both the United States and China export a fair amount into Europe. And so our growth rate, we could be affected. If Europe were to, in effect, go down and have a second recession, have a W, in effect, in their economic -- they went -- they went down into a recession and started coming back up and they go back down again, that will have an impact.
It's also true that there may be a number of financial institutions in the United States that could have exposure if suddenly Greece can't pay its debts, if it goes, if it tanks. And that's not out of the question yet.
Nobody knows about whether the under -- whether the governments involved in those various countries you named, starting with Greece, whether they have the capacity, really, to bring their debts down, to bring deficits under control. Even in the U.K. There's uncertainty about whether they can do that. And, of course, that's a foretaste of what the United States itself is going to face with deficits in years ahead.
BLITZER: So how vulnerable is the U.S. economy right now?
GERGEN: Well, the underlying economy, Wolf, by all accounts, is strong. We've seen a number of indications. You know, if -- if Europe were out of the -- you know, not in the picture, I think most economists would agree that we're going to have 3, 3.5 percent growth this year and good growth next year.
But Europe is becoming the wild card in the equation. And it's -- it's accounting for this huge volatility -- that, along with the tensions in -- in North Korea.
But that volatility is giving us pause about whether we can continue on this growth rate. Will we plateau, in effect, or maybe, worst case, go down ourselves and have a W?
Nobody quite knows. There's enough that's causing worry. It's causing this volatility. And it does suggest that even as we come out of this, that we are -- we still have vulnerabilities. There are still fragilities in this economic picture.
BLITZER: And even if there is some economic improvement, the jobless rate is going to hover...
GERGEN: Right.
BLITZER: -- around 9 or 10 percent, at least for the balance of this year, based on all of the economic indicators that are out there.
All right, David.
Transcript from The Situation Room aired on May 25, 2010
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