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War Generates Uncertainties for Whole Industries and Small Business
Daily Policy Digest

Economic Issues / Economic Issues

Monday, March 24, 2003
War can make life miserable for businesses -- both large and small -- because is spawns uncertainties and confusion. Even General Motors chairman Jack Smith has warned that until the war in Iraq is over, "I think we'll see a relatively weak market, where it really doesn't matter what you do."

The U.S. airline industry -- already greatly weakened after the events of Sept. 11, 2001 -- may be the one most negatively impacted by the war. The Air Transport Association estimates the war may cost carriers $10.7 billion.

But war jitters take their toll on other industries as well and in a variety of ways:

  • Workers preoccupied with the war news have become less productive, experts say.
  • Investors sit on their hands, afraid to make commitments until the probable outcomes are clarified -- while small business owners wonder how long they can afford to keep their operations running as profits shrink or vanish.
  • Retailers are confronted by near-empty malls -- as consumers sit at home watching the conflict on CNN.
  • Big-ticket items such as cars, appliances and foreign travel will be hit hardest by the war, marketers report.
And as advertisers back away from expensive marketing campaigns, media outlets suffer.

Source: Bruce Horovitz, "Business in the Shadow of War," USA Today, March 21, 2003.

For more information
http://www.usatoday.com/usafront.htm

For more on Economic Issues
http://www.ncpa.org/iss/eco/
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