Even before the conflict with Iraq began, the U.S. economy was sluggish. Now new data appears to indicate the war is a significant drag on the American economy. VOA-TV’S Chris Simkins has more on this.
Since the war began American consumers have been buying less. One indicator is new car sales. The lack of car buyers means inventories at dealerships are piling up.
In an effort to increase sales the big three American automakers are offering incentives such as zero percent interest rate financing for five years.
GENERAL MOTORS AUTO DEALER
“It’s a slow market so to move these cars they need to bring something out.”
At the same time gasoline and oil prices continue to swing sharply up and down. Oil prices are up 15 percent since the war started.
U.S. Energy Secretary Spencer Abraham says officials are prepared to use the country’s strategic oil reserves to make up for nearly two-billion barrels of oil Iraq used to export each day.
SPENCER ABRAHAM, U.S. ENERGY SECRETARY
“We are prepared to act quickly if we’re needed to reinforce what OPEC’s increased production’s doing to make sure there won’t be disruptions in supply.”
Analysts say U.S. retailers are also being hurt by the war because of shaken consumer confidence. Giant retailers Wal-Mart, JC Penney and Federated Department Stores are warning that March sales will be weaker than expected.
The electronics store, Best Buy, said the only things that are selling well are television sets, as Americans want to watch war coverage. But CEO Brad Anderson says overall business is weak.
BRAD ANDERSON, CEO BEST BUY
“It’s a noticeable and measurable drop off in sales since the beginning of the war.”
While consumer spending is down, business at American factories has slowed too. A new report indicates that the run up in energy prices before the war and a drop off in new orders brought manufacturing to a virtual standstill. John Ryding is an economist with Bear Stearns.
JOHN RYDING, ECONOMIST
“As long as we have a war going on in which there are a lot of uncertainties surrounding the outcome, the range of risks that we face, we may continue to see business hunkered down.”
A Survey by the US Labor Department says American businesses shed 108,000 jobs last month as America’s jobless rate remains at 5.8%.