Forum Archive Index - September 2001

["dsproul" <dsproul@corsairmarine.com>]

To be realistic, no one could confidently predict what will happen when markets re-open on Monday.  And in any case, it probably doesn't matter.

 

What matters, I think , is that the forecast of US recovery , which most commentators had last week placed as likely to show up around the second quarter of 2002,  now may not occur for some time after that.  

 

My reasoning for this is that we have been hearing for some months that the main saviour of the US economy this year has been the private consumer, who has managed to maintain a level of spending which has surprised economists , and compensated somewhat for the drastic downturn in corporate capital investment.

 

After last week's shocking events, I could see that, even the subsequent rise in patriotism will not translate into a desire for these consumers to go out and spend  as freely as before .  (And as anyone who knows America well will testify, they are already probably the world's most patriotic citizens).

 

Put yourself into an American's shoes. With the country now beginning a period of heavily upgraded security (even to the point of not allowing backpacks into baseball parks), and with the declared state of war readiness, would you be rushing to the new car dealership, or to the department store for a new fridge, or to the hardware store to buy some timber for a  house extension?   Would you be buying air tickets for that holiday in that exotic location you have been thinking of going to for months?  Would you even be bothered to go out for  a night at a restaurant, or an afternoon at the Fun Park when you are so distraught with the feeling that your beloved country has been so easily violated , and your heart is heavy with sorrow for the thousands of your fellow Americans who perished in that terrible way?

 

I fear that apart from a few select industries,  munitions and armaments the obvious one, there is going to be a slowdown in consumer spending and a consequent drip-down effect to the very core of the US economy, and of course the follow-on effects to all other economies. 

 

Like a lot of other investors, I will watch the developments of the next weeks and months.  It seems that this incident is galvanising some unity in the free world to rid  the planet of terrorism , as far as this can be done in the short term.   If  this process moves quickly, effectively, and hopefully with few casualties, consumer confidence MAY be restored earlier than currently seems possible.

 

I dearly hope so, on all counts.

 

David .

 

 

 

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