Sunday 6 April 2003
The US economy seems to have all but stalled out in recent months, or perhaps even contracted, and a raft of gloomy data have economists worried a revival may be difficult even if the Iraq war ends swiftly.
Nervous that the war would hurt their sales, many businesses froze hiring and cut their investment budgets in the run-up to the US-led attack on Iraq, now in its third week.
Consumers, stalwart even in the depths of the recession that began in 2001, pulled back in the first two months of 2003 after a car-buying spree late last year.
However, the so-called "CNN effect" on consumers has proved limited.
Defying some fears that they would stay at home glued to the television once the war began, anecdotal reports suggest they did keep shopping.
Yet an increasingly bleak jobs picture might keep them wary of spending too freely, which in turn would deprive the economy of a strong engine for growth.
"The recovery, which is very fragile, may have actually turned into a downturn a few months ago," said Rajeev Dhawan, director of the Economic Forecasting Centre at Georgia State University.
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