Roanoke Times
Copyright (c) 1995, Landmark Communications, Inc.
DATE: FRIDAY, March 1, 1991 TAG: 9103010053
SECTION: BUSINESS PAGE: A9 EDITION: METRO
SOURCE: DANIEL HOWES BUSINESS WRITER
DATELINE: LENGTH: Medium
Serious economic problems still loom, tempering war euphoria. National attention to questions of war and peace may soon give way to issues of economy and recession as layoffs continue to mount, corporate and consumer debt remains high and tax increases masked by war start to bite.
"If you just lost your job, the troops coming home isn't going to make you go out and buy a new car," said Alan Gayle, chief economist for Crestar Bank in Richmond.
"I'm not at all convinced that an end to the war itself is going to bring about an end to the recession. It's going to take some legitimate growth to take care of these problems."
In Virginia, a $2.2 billion budget shortfall still may necessitate furloughs of state workers and additional cutbacks at state agencies, including colleges and universities. Officials at Virginia Tech said this week they still are waiting to see final details of their budgets.
Indeed, uncertain state funding may continue to dampen spending in such areas as the New River Valley and Richmond, home to many state employees. Then, too, the prospect of troops returning to bases in Tidewater may mean increased consumer spending.
Overall, "it's a psychological boost," Gayle said. "If you live in Hampton Roads it would be a tangible boost."
Glenn Bowman, chief economist for Dominion Bankshares Corp. in Roanoke, said the war's early conclusion "will increase the probability that this downturn will be shorter and milder that it would have been otherwise.
"The invasion of Kuwait . . . and increases in oil prices were probably the straw that broke the camel's back," he said. He, too, expects consumer confidence to continue edging upward but thinks the booming recovery some predict will not materialize.
According to the Conference Board in New York, consumer confidence improved in February for the first time in six months. People were more pessimistic about current conditions than they were last month, but expectations for the future were more optimistic.
The board's consumer confidence index rose 2.6 points to 57.7. As recently as last July, the index exceeded 100, but confidence plummeted in October and has been drifting downward since then.
The war's end will improve consumers' willingness to part with money, Gayle said, but that doesn't mean they will spend it. Job-security fears remain, office buildings stand vacant and many industries - employing thousands - are reeling from a year of record losses.
by CNB