By Maxine Shapiro, KERA 90.1 business commentator
Dallas, TX – Gazing at last week's performance in the stock market, one might get the idea war is good for the economy. War is never good, as reality sets in today. I'm Maxine Shapiro with KERA Marketplace Midday.
Oh, how the market hated the uncertainty. Since January's first beat of the drums, the Dow Jones Average had been on a steady decline. Mind you, the economic news didn't help matters either. Then nine trading days ago, the Dow looked like it was on its way to test the 52-week low. President Bush announced he would delay the vote by the U.N. Security Council, and some investors took this as a positive sign for diplomacy. Others saw it for what it was, Bush's no-nonsense way of announcing no more waiting. And sure enough, the "War Rally" began. Last week, the Dow had its best weekly gain in twenty years. But as news of resistance in Iraq spread over the airwaves, the optimism investors and non-investors were holding onto quickly turned into the truth about war - it too is uncertain. And so today, the market is giving back some of its gains from last week. Please, expect nothing else in these times. It's emotional, and it's volatile.
Even as we hope for the swift resolve in Iraq, the truth and uncertainty of the economy is waiting in the wings. Unlike the encouraging chatter we heard from economists after the September 11th attacks, this time economists are a little more reluctant to predict what our financial landscape will look like after the war. Unemployment is still high, and corporate spending has become an oxymoron. Economists are split on President Bush's tax cut plan. And no matter how you look at it, the U.S. budget deficit is growing as fast as the anti-war sentiment in Europe. Let's say President Bush's proposed tax cuts become law. The New York Times reminds us that even without the war, the deficit would exceed $300 billion. Add the war and the probable occupation in Iraq, and we can add another $300 billion, according to an independent financial research group.
So even when the economy eventually turns around, let's drop the notion that war is good. For KERA Marketplace Midday, I'm Maxine Shapiro.
Marketplace Midday Reports air on KERA 90.1 Monday - Friday at 1:04 p.m. To contact Maxine Shapiro, please send emails to mshapiro@kera.org.
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