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Strategies & Market Trends : Classic TA Workplace -- Ignore unavailable to you. Want to Upgrade?

To: bcrafty who wrote (53317)	9/16/2002 12:34:30 PM
From: John Madarasz	Read Replies (1) \| Respond to of 209892

U.S. Economic and Interest Rate Outlook As Goes GM, So Goes The US Economy? September, 2002 Our forecast this month does not incorporate a war with Iraq, although it probably should. As mentioned above, a war would imply increased defense expenditures. Oil prices already have risen in anticipation of war. By the way, this increase in oil prices is going to lift the year-over-year percent change in the CPI over the remainder of the year. If military victory for the US comes quickly without major interruptions to oil supplies from the Persian Gulf, then oil prices might fall sharply soon after the victory. If not, they won't, and a stagflationary environment will occur. In the event, our GDP forecast is too high; our inflation and longer-maturity interest forecasts are too low. A military victory by the US is not in doubt. What is in doubt, however, is how the peace will be secured. Iraq is an "artificial" nation created after World War I. It contains at least three groups that don't particularly get along with each other. If we get "stuck" in Iraq trying to nation-build, then the mood in America could sour more than it already has. That would not be bullish for financial markets or the economy. Paul L. Kasriel Director of Economic Research