| "The
populace is more disturbed by indecision than by the actual occurrence of the
event. I believe the economy will recover nicely once the war with Iraq is resolved.
This issue would have been resolved long ago if the world leaders would take a
united stance against countries who involve themselves in developing inappropriate
weapons."
- Gene Fox, BN'53,
retired
"This is a
'no-brainer.' You needn't be a Drake graduate or MBA, like me, to figure out that
our economy will suffer greatly from a conflict in the Middle East. In particular,
disruption of oil supplies will devastate the auto and housing industries and
any other industry that is highly dependent on fossil fuels. Further, the deployment
of U.S. troops has taken thousands of experienced and productive workers out of
the workforce. They are replaced, perhaps only temporarily, by the inexperienced
and untrained, if they are replaced at all."
- Alan Steckman
GR'00, adjunct faculty, Hamilton College and Buena Vista University
"I feel that
the Middle East situation has a huge impact on the USA economy for a number of
reasons. The obvious one that is gas prices are slowly creeping up, which effects
travel and people's discretionary income. Also, people are scared and simply not
shopping. Working in retail, it is evident that people are only buying what they
need and are being credit-conscious. However, this is the short-term affect. If
war becomes a reality - then maybe the economy will take the turn it's needed
for some time."
- Dolly Melissa
Willimack, BN'00, executive team leader, Target Corporation
"Sight of
the gallows tends to focus the mind."
- Jason D. Mathes, CFM, BN'98, wealth management advisor and senior financial
advisor, Merrill Lynch
"What we're seeing now is largely an event-driven market. Tangible indicators
seem to have little effect on the market's direction. The conflict in the Middle
East has simply extended the current state of the economy and will continue to
delay substantial economic recovery."
- Jason W. Black,
BN'01, investment management analyst, Smith Barney
"The war itself
will have little impact on our economy. We will unlikely approach the 40 percent
of gross domestic product that was spent on WWII and revived that economy after
the Depression. However, the psychological impact of the war is continuing to
stall the nascent recovery and will likely force the economy back into recession
until the situation is resolved."
- Dr. Richard Nemanick,
BN'91, principal, Nemanick Consulting Group
"I see two
dramatic effects of the current administration's policies on our economic possibilities:
1. Economic commitments
are based almost entirely in the psychological sense of the future. Uncertainty
is the principal deterrent of investment and hiring of people. The climate of
uncertainty and confusion about the various possible outcomes of the war policy
are seriously diminishing options for the economy.
2. The immense
diversion of federal funds into military priorities without any explained program
for how all this will be paid for, coupled with supposed tax incentives for bolstering
the economy, create additional apprehension among those in the position to make
decisions that promote positive futures.
The country appears to be on a one-way street headed for major financial uncertainty."
- Richard B. Miles,
BN'51, president, Health Frontiers
"The Middle
East Conflict/Intifada along with the events of 9/11 made U. S. consumers, who'd
been the U.S. economy's only engine of growth the last couple of years, cautious
and skittish, and consumer spending fell along with higher oil prices, dragging
the economy and the stock market with it. This caution is, I believe in anticipation
of what happens with Iraq - do we attack or will they capitulate without our having
to attack? The sooner something happens in this respect, the sooner the economy
will start moving, because not knowing what's going to happen rather than what
will result (win or lose), is what's causing the concern. The attack or act of
war will not stimulate the economy."
- Ivan Marks, BN'63,
Parker Aerospace
"The potential
conflict in the Middle East continues to hold our economy hostage. The threat
of possible terrorist retaliation remains the X factor in attempting to predict
the usual economic benefit of going to war. Our prospects for full economic recovery
continue to sputter. The lowest mortgage interest rates of our lifetime provide
welcome relief to homeowners during this time of uncertainty."
- Scott Keller,
BN'76, Wildwood, MO
"The escalating
situation in Iraq will have little impact on the economy as a whole, because it
is only one aspect contributing to the falling Consumer Confidence Index, which
fell from 78 to 60 this month. Housing market results were released The same day
as the CCI. Their estimate, based on fears of impending war, were sales of 4 million,
down from the previous month of 4.8 million. However, housing sale data actually
topped 5.2 million. But, don't let this fool you, the probable war does play a
part, but is only one part contributing to an already sluggish economy, partly
due to the burst of the internet bubble and high number of corporate scandals."
- Ryan R. Anderson,
BN'02, financial consultant, Wells Fargo
"I think the
conflict in the Middle East will have positive long-term effects on our economy
that will far outweigh our current problems. Aside from a moral obligation as
the world's only remaining superpower to liberate the Iraqi people, a targeted
and strategic operation in Iraq represents an important step in our battle against
global terror. This may disrupt our economy in the near term, but a pacifist,
conciliatory attitude to toward those who harbor, support or are indifferent toward
terror is far worse for the global economy over the long-run. The Bush administration's
tax policies and efforts abroad to wipe out terror groups and their support networks
(including Iraq) offer us the best chance of a stable global economy going forward.
Our investment in military action and global PR merely represents our initial
investment to that end."
- John Schultz,
BN'01, analyst, TripleTree
"The Middle
East conflict is giving a one-two punch to the economy. The most measurable effect
is the direct financial cost of the military escalation and deployment running
an additional $2 billion-plus per month before the actual conflict begins. The
more difficult to measure, but no less damaging to the current economy, is consumer
confidence, which was recently measured at its lowest level since 1993. Combined
with oil prices at $10 a barrel above average benchmark prices - which drain disposable
income - consumers are pulling in their wallets. This, of course, ripples back
to the corporations who in turn curb their forecasts and subsequent investment
spending. So we have a malaise in the economy and the financial markets. The good
news is, we should have allot of pent-up demand when things settle down."
- Gary S. Kerlagon,
BN'72, chairman, NAPCO International
"It seems
pretty clear to me that companies are factoring that risk into their investment
decisions and, consequently, holding off on some investments -- which, of course,
slows our economy. But the War on Terror will not stop with Iraq, so, we'd better
get used to this risk. I believe that the risk associated with our actions after
Iraq will be somewhat smaller, and I assume that companies and investors will
view that risk similarly. The perceived magnitude of that risk will turn on how
well the Iraq battle progresses. So, if Iraq goes well, I expect a rise in the
stock market and the overall economy - at least until the next significant battle
is at hand."
- Scott Wolfe,
BN'82, LW'89, Corporate Counsel, Alcatel USA
"Consumer
confidence is definitely down in a large part due to inflated oil prices. However,
it needs to be pointed out that the problems in Venezuela have a greater impact
on the price per barrel of crude than the current Middle East crisis. Since before
9/11 and with greater impact after, our country has begun to feel the sting of
a worldwide recession. The conflicts in the Middle East have provided a convenient
stomping ground for journalists and pundits to point out our economic woes. After
all, somebody has to be guilty, right? The fact that NAFTA has removed a very
significant part of our GNP is seldom mentioned anymore. The late '90s fascination
with dotcoms and the inflated stock market hid the fact that NAFTA was killing
us in the manufacturing sector and removing a large part of our economic stability.
This isn't intended to be an attack on NAFTA; it appears to have redeeming social
and eventual economic value. We live in a worldwide marketplace, we can't expect
to be totally insulated from the hiccups that occur within that marketplace. If
conflicts (and there is more than one) in the Middle East are negatively affecting
our economy it has more to do with fear of the unknown related to war, terrorism
and the costs, both real and imaginary, than real fiscal effects due to market
strains coming from that region."
-Marc Melkerson,
BN'89, vice president of sales and marketing, Renova Technology
"The economy
in the U.S. is really in a wait-and-see pattern. Momentum in the economy cannot
be generated regardless of earnings or sales figures, due to the unknown associated
with where the conflict in Iraq will end up. Regardless of how this ultimately
plays out, I feel the U.S. economy, and the market in general, is ready to recoup
the losses of previous years and recapture a lot of the paper wealth that has
been lost. This will be on hold until the final U.S. strategy in dealing with
Iraq/Hussein has been enacted."
- Mike Downing,
BN'79, vice president of group benefits, Principal Financial Group
"Two issues
seem to be at hand. The first is the stock market and the second is consumer confidence.
The market has already taken into account the prospects of a war in Iraq, thus
preventing a sustainable rally anytime soon.
Consumers, fearful of further potential downturns and subsequent possible job
loss, are reluctant to make large capital expenditures, thus slowing recovery
efforts. This can be seen in consumer confidence metrics recently published. Decades-low
interest rates are keeping the housing market afloat, but consumers are saving
and/or keeping result of lower housing payments on-the-sidelines for now.
There will be a handful of companies, such as defense contractors, that will continue
to prosper."
- Mark Scott, BN'77,
vice president & general manager, homeland security division, Intrado Communications
|
|
"In
my view, the conflict in the Middle East, specifically Iraq, is causing a short-term
negative impact on the U. S. economy and financial markets. The drivers of the
economy and financial markers abhor uncertainty such as we currently have. Substantial
business investment and personal spending is being deferred until there is clarity
of direction in the Middle East. Once a direction is certain, the underlying strength
of the economy (which is significant) will become evident. The real issue seems
to be the timing of a recovery rather than the fact of a recovery. If the Iraq
conflict is slow to resolve our economy may be stagnant for an extended period."
- R. Richard Brown,
BN'67, tax partner, BDO Seidman, LLP
"In response
to your question, the 'uncertainty' of a possible conflict is certainly having
an impact on the economy - all one has to do is look at the Dow Jones every day.
We know it's adding to the increase in fuel prices even though the beginning of
the increases started when there were some labor problems in South America.
When and if a conflict
starts, we would expect fuel to go even higher and the market to go lower. How
long these problems last will depend on the length of the conflict, if it spreads
to other countries and even causes terrorist acts in the USA. If the debt to pay
off the war expenses causes interest rates to rise, we should definitely see an
adverse effect on the economy as prices will rise as businesses try to pass on
higher costs, loan rates will rise and consumers will cut back purchases.
Let's just hope
the conflict will be short and not spread to other areas!"
- D. Utter, BN'80,
account executive, A.J. Gallagher & Co.
"If we keep
ourselves at the orange terror alert level, then the economy will keep going downhill.
We need a war to boost our economy, just like the Gulf War. I am almost 100 percent
sure we will go to war because the US has already invested too much on this. Personally,
I am against war but this is the reality."
- Yu-Kwang Chu,
BN'97, purchasing manager, Dexas International Limited
"People and
their companies are concerned with the Mideast conflict. The impact is that some
projects are in a holding pattern till we get through this, but personally, business
is good."
- Dave Vance, BN'61,
owner, Alpha One Commercial Real Estate
"I think the
war in the Mideast has a big effect on the economy, but not as much as President
Bush's 'Leave no millionaire behind' tax bill."
-
Dan W. Smith, BN'53, GR'55, self-employed consultant
"If Iraq,
with its oil money and large army, took control of the Middle East, the long-term
results would be catastrophic. The effect on our economy is but one factor in
a complex issue. Ronald Reagan's huge military budget created deficits but broke
the back of the Soviet Union. That is a major reason the Eastern European countries
broke with France and are with President Bush."
-
George Babick, BN'57, retired senior vice president, TV Food Network
"The current
uncertainty about war with Iraq is preventing the U.S. economy from achieving
recovery. A quick and favorable resolution of the impending war, along with a
recovery in business spending, are essential for any kind of meaningful economic
growth in 2003."
-
Karen Van Hamme, LA'83, GR'88, commercial real estate researcher, Principal Financial
Group
"In a recent
issue of the Philadelphia Inquirer, the business section quoted a private business
research group as saying the consumer confidence index plunged to the lowest level
in nearly 10 years in February. The confidence index level fell almost 15 points
in February to 64.0 - its lowest reading since October 1993. Low interest rates
on mortgages continue, however, to pull the housing market upward. In January,
sales of previously owned homes surged to their best month ever. This leaves my
industry - furniture - in limbo. The furniture industry lags behind new home sales
and is turning downward in sales."
-
Robin Getzoff, BN'61
"The short-term
effects carry a political objective but have devastating effects in the long run.
Given the current recessionary economic conditions: the falling private investment,
unsustainable private debts, state and local fiscal crisis, a confidence distemper
spurred by capital corruption and a predicament of a soon decline in total oil
production, the Bush administration's best prescription for these concurrent domestic
problems is as follows: By diverting attention toward the battlefield, the administration
might be able to distract the voters' attention away from these real domestic
economic problems that might hinder the efforts of reelection if the public perceives
that the administration is not handling them properly.
A war with Iraq
will allow the rationalization of massive public expenditures that will have to
be financed through government bonds. Given the chaotic private equity performance
caused by the burst of the bubble and a recessionary economy, the government bonds
would probably be perceived as a ludicrous investment instrument in the eyes of
many skeptical investors. As a buyer of last resort, the Federal Reserve would
purchase any leftover bonds if there are any; hence the government would be able
to come up with a blank check if necessary to finance the war and the post-war.
This would flux money into the stagnant economy helping reduce the unemployment
problem and spurring growth. The government could then argue that their economic
package (reducing income taxes) or more general their economic policies have been
effective despite the unfriendly economic environment. With this delusion in mind,
the administration would use it as a bargaining tool to recruit voters in the
next election campaign. The long-term results, of course, are disastrous: adding
government debt to the already $5 trillion will not solve the rising costs in
social security, Medicare and Medicaid. Furthermore if the dollar value continues
to decline, foreign capital will start to flux out of the country, and unless
consumers start to change their savings patterns - a doubtful event given the
severe level of consumer debt - the administration will have no other alternative
than to further issue debt or to raise taxes in order to meet their real economic
obligations. In other words, the economic problem is passed over to the next administration;
the real losers will be consumers - by paying more taxes - and the business community
- by suffering from this unfriendly economic environment."
-
Enrique Garcilazo, BN'99, Ph.D. student at the LBJ School of Public Policy, University
of Texas
"The impact
to the economy and to the taxpayer is more far-reaching than most would think.
I work in local government where many of my police officers, fire fighters and
EMT's are in the military reserves. When they are activated, my budget increases
for a variety of reasons. For a certain period of time while they are on active
duty, I am obligated to pay them. At the same time, I must pay someone to perform
the functions of their position here. In addition, for the entire time they are
gone, I either need to pay overtime because other officers, etc. are covering
those shifts or I have additional training and other expenses to fulfill the responsibilities
of the positions temporarily vacated. Further, the price of fuel often increases
during such a conflict and my organization, as other local governments, consumes
tens of thousands of gallons of fuel annually. While we strive to minimize these
costs through scheduling, alternative patrolling, etc., they are costs that must
be factored into the entity's budget; the end result of which is increased costs
for local taxpayers. All of these costs drag on individual families and the economy."
-
Marketa George Oliver, BA'88 GR'90, city administrator, City of Windsor Heights,
IA
"Because there
is no conflict between the US and Iraq after 14 months of debate and delay, the
impact on our economy is also one of delay. We remain in an 'economic vacuum,'
waiting for the conflict to actually begin. Once the obvious begins, then the
economy will begin its forward movement and we will resume economic growth.
You have asked
for us to provide you our comments on the economy. Combine with that our heartfelt
prayers and thoughts for all of the U.S. service personnel whose lives are at
risk for us and our wonderful country. So, this is merely one veteran that is
suggesting that you temper your concern about our economy with an equal concern
for the welfare of our military personnel, i.e., the children of our future.
Thank God, we live in truly the most glorious country in the history of mankind."
-
Jim Fisher, BN'68, CEO, IMST Corp.
"I believe
people are looking for an economic Solution in the results of the war. This is
war that doesn't include the US workforce like in the past great wars, and therefore
doesn't positively or directly effect the economy.
Confidence in the
economy dropped after the tech market plummeted - not 9/11 - and a war in the
Middle East may lead to the loss of a lot of foreign investors making it harder
to gain confidence in the market. The only economic advantage to war is if we
capture foreign oil fields which would irritate the massive worldwide Arabic population
and make us more prone to terrorism."
-
Michael Krain, BN'89 Grad, territory manager, Biora Inc.
"The possible
war with Iraq has a major impact on our economy. I think we will be stagnant until
we rid them of their dictator."
-
Gene Fertig, CPCU, BN'51, retired
"Flight of
capital from U.S. markets, lower U.S. equity markets, U.S. currency and increasing
(dangerously) the trade deficit."
-
Tim Webster, BN'83, president and CEO, American Italian Pasta Company
The opinions expressed
in "Talk of the Town" are those of the individual respondents and do
not necessarily reflect those of Drake University or its College of Business and
Public Administration. |
