Local leaders have an eye on economy
Published 12:00 am Wednesday, March 19, 2003
The uncertainty of war has left financial officers and elected officials scrambling for their crystal balls in an attempt to predict what effects a war could have on an already sluggish economy.
U.S. Rep. Ted Strick-land (D-6th District) said the mood in Washington D.C. is a somber one, just as it is across the state of Ohio and that predicting the effects is very difficult.
"I think it is almost impossible to know for sure what effects it could have," he said. "It is going to cost us a lot of money, we know that. We have already spent billions in preparation."
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Although a war and the following occupation and reconstruction could be costly, Strickland feels it may help wake up the economy that has almost been on hold for months due to the uncertainty. The biggest question mark is what effect it will have on the oil availability, he said.
Mark Compston, of Edward Jones Financial in Ironton, said that the financial company has been looking at historical statistics to determine the possible effects the war could have.
"The one thing that impacts the investment world the most is uncertainty," he said. "The short-term events will always be there, but we will always progress. The short-term events should not disrupt the long- term planning."
Based on information compiled by Edward Jones from 26 world events during the past 60 years, the economy is initially slowed, but within six months, the Dow Jones was up an average of 11.8 percent.
After the Gulf War ultimatum in 1990, the market fell 4.3 percent. Six months later the Dow was up 18.7 percent.
With a war appearing all but certain and much of the uncertainty gone this week, the stock markets were up 282 points Monday, nearly a 3 percent growth, Compston said.
"We want to stress we are not taking any stance on whether the war is right or wrong," he said. "We are simply trying to see what a likely scenario is for the economy and give advice and information based on that."
Overall, it is normal for people to be cautious and wary during times of conflict, he said.
State Rep. Clyde Evans (R-87th District) agrees that it is the uncertainty that has been the biggest problem and the economy may rebound now that a war appears inevitable.
"Right now, we just do not know. I am not sure even a trained economist could determine what the true effects a war could have," Evans said. "Economists are like baseball players. If they are right one out of three times, they end up in Hall of Fame."
The nation's economy will have a lot of bearing on the state budgeting process, but hopefully once the uncertainty is over, people will regain confidence and go out and spend money so the legislature will not have to cut programs or increase taxes, Evans said.
On a local level, the prospect of a war has caused the city of Ironton to look closely at its 2003 budget.
Two particular areas of concern are utility and fuel costs.
City Finance Director Cindy Anderson said she added a 10 percent increase for fuel costs and an additional 5 percent increase for gas and electric costs.
These precautionary estimates may not even be enough, depending on how long the war lasts, she said.
Pat Clonch, executive director of the LEDC and the Greater Lawrence County Chamber of Commerce, said it is hard to predict what effect a war could have on an already struggling economy.
"I know the economy is already in dire straits on a state, local and federal level," she said. "According to analysts, the uncertainty has caused problems on Wall Street, but the economy was already in a downturn."
State Rep. Todd Book (D-89th District) agrees that the uncertainty does pose challenges for the budgeting process on the state level.
"On a state level, my focus is to get the budget straightened out without taxing the people," he said. "Obviously, everyone has the jitters and the stock market shows it."
Despite all the uncertainty, struggling economy and budgetary problems, the country needs to be united, he said.
"We must rise above the issue of the economy and decide what is the right thing to do for us as a nation."