Tension in Iraq appeared to be a big concern of many attending an investment workshop Tuesday, but a military strike could actually improve consumer confidence, financial advisers said.
A U.S. attack on Iraq may not bring a short-term resolution, some said, but it would end the uncertainty that has caused worries on Wall Street for several weeks.
"People like to have a sense that we are doing something; it makes them feel better," said Will Rogers, a certified financial planner with American Express Financial Advisors, which sponsored the event.
Although the financial markets are still near three-year lows, Robert Centers, also of American Express, told the group that the fundamentals of the U.S. economy are still sound.
He cited low interest and inflation rates and unprecedented new home and car sales as evidence.
"The good news is that the economy is not falling apart," he said. "The bad news is that I don't know when the Dow (Jones Industrial Average) will go above 10,000 again. Nobody does. My portfolio is down big time, like a lot of yours."
Consumer spending - which accounts for roughly two-thirds of all economic activity - has helped buoy the economy during the recession, but Mr. Rogers said he believes government spending increases for homeland security and the war on terrorism will help boost gross domestic product.
"Government spending filters back into the economy quite well," he said.
Mr. Rogers also said proposed changes to the corporate tax structure early next year could increase business spending, another key component to economic growth.
Based on historical market statistics, the country is in the second year of a cyclical bear market, and it will be five to eight years before the Dow never again drops below its all-time high of 11,722.98, reached in January 2000.
Mr. Rogers said he believes a market rebound will be led by nonpharmaceutical health care companies, such as hospitals and medical device makers, and the financial services sector.
Reach Damon Cline at (706) 823-3486 or firstname.lastname@example.org.
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