U.S. economy will be OK, says USU professors
The war against Afghanistan has raised questions concerning the status and stability of the global and local economy. Although the affects varies, USU economists do not think it will be a long term problem. In fact, panic is one reason why the local economy may be making a slight shift. Recession is not yet a problem in the United States at the moment, said Basudeb Biswas, professor of economics. In fact, he said, the way recession can be confirmed is through the GDP quarterly report, which is not published yet for this quarter. “Because of the terrorist attacks, people are not sure,” Biswas said. “Economy is stimulated by the expenditures of people.” Deevon Bailey, professor and extension economist, said the biggest affect on the nation’s economy is the crisis of confidence and uncertainty concerning what is going on. As a result, Bailey said, “Consumers, when they are uncertain about their jobs or status of employment, will cut back on purchasing; and that has a ripple affect on the economy.” Because of initial shock of the terrorist attacks, the stock market is now viewed as more risky, said Arthur Caplan, assistant professor of economics. He said although this may not be a long term affect, it will probably continue beyond a short term period. The shift of the economy shows the people’s loss of faith in the future to some degree, Caplan said. “As consumers don’t spend, inventories build up,” Bailey said, “and that’s been the principle affect on our economy, tethering on the break of recession.” But even though the U.S. economy seems to be on the brink of recession, Biswas said the fundamentals are still there. He said the fundamentals of economy do not and have not change, and as a result, there should not be any change in the economy. And even if the economy ever changes due to the panic of the people and consumers, the affect will only be temporary, he said. “There is an element of uncertainty that is affecting the behavior of the people,” Biswas said. To Caplan, the fact that there is a war plays a significant affect on the economy too. He said there is a difference between the affects of war on the nation’s economy between 60 years ago and now. “Back then,” Caplan said, “the U.S. mustered the resources to fight a war.” Caplan said the government about 60 years ago was taking investors’ investments and capital resources to support a war. He said the war then required war efforts and industries to be a large component. And although the weight and the effort of war may be much greater today, the efficiency of today’s world, even during a war, has increased. “I am not surprised that we can carry out a war today without impacting our everyday lives,” Caplan said. “If you talk to the average people today, the war in Afghanistan is really not affecting our daily average person’s life.” But even so, Bailey said from the agricultural perspective, the economy will take a slight dive when people start to lose confidence on the nation’s economy. For example, upscale and expensive restaurants will be affected as consumers shop and eat out less, he said. Bailey also said the meats industry, especially beef, are significantly affected. “Part of that is because beef production has been relatively high, and prior to the Sept. 11 attacks, the demands were also strong,” Bailey said. “But that has weakened. As a result, prices of beef and consequently cattle are lowered.” Fighting a battle in countries that are already ravaged by years of civil war– countries that weren’t productive to begin with– may not have much of an affect to the global and local economy, Caplan said. But if the war continues on for more than a year or two, the affects on the economy might be more drastic. Biswas said as long as the people do not panic and act rationally on their financial decisions, the economy will not suffer. The fundamentals to a healthy economy have not changed, and if people were to take careful measurements, the economy will return soon to a healthier state, he said.