A Turn For the Better? Big `Ifs' Remain for Economy, But Experts Are Less Pessimistic
The enormous cloud of uncertainty that has hung over the U.S. economy for the past five months began to dissipate last week when U.S. and allied forces attacked Iraq.</br></br>For better or worse, American households and businesses will soon know the outcome and can again make long-term plans accordingly. The invasion of Kuwait last August had produced a sort of paralysis of planning. Business executives in many industries said they were avoiding new long-term commitments wherever possible. Surveys showed that consumers cut back plans to buy new homes or cars or take vacations.</br></br>These effects, along with the real damage from soaring oil prices to consumers' pocketbooks and businesses' profits, battered an already weak U.S. economy and tipped it into a recession.</br></br>If the progress of the war and the reaction of the markets to that progress continue, there is a broad consensus that the economic outlook will have taken a decided turn for the better. The ifs remain big ones, but a swift end to the conflict would bring a double dividend to President Bush: It would insulate him from criticism over high casualties more likely from a longer war and the likely economic improvement would eliminate recession as a club in the hands of his political opponents.</br></br>Federal Reserve Chairman Alan Greenspan, who before the attack had said the economy's slide was slowing, said last week's developments should make the recession both shorter and more shallow.