Washington — A pause before a looming war is evident in the woodlots of northwestern Pennsylvania, the man-made caverns of western Missouri and other places where Americans are putting off business decisions they might otherwise make.
Mickey Curran is general foreman of Dennis Smith Logging Co. of Erie, Pa. In ordinary times, he would be buying hardwood from landowners for cutting, milling and sale to furniture factories as far away as South Korea.
"I've got six crews out of work right now because of the fact that we're hesitant on buying timber," he said Tuesday, "because we know if we buy timber today and we go to war, the market's going to fall apart on the timber and we'll just lose a lot of money."
Each crew consists of two men. "They're flat out of work." People in the timber trade "took a tremendous, tremendous beating" after the Sept. 11, 2001, terrorist attacks, Mr. Curran said.
With U.S. President George W. Bush vowing to invade Iraq within weeks if disarmament demands are not met, "yeah, we're holding off buying timber right now."
Multiply that delay many thousandfold and the costs of economic paralysis mount quickly. U.S. companies are reluctant to hire workers and invest in equipment. Deal makers on Wall Street stand by, waiting for the war clouds to clear.
In New York, Anirvan Banerjee, research director of the authoritative Economic Cycle Research Institute, sees decisions by people such as Mr. Curran showing up in the statistics.
"We know they're not hiring. Just look at the jobs numbers from last Friday. Rather than going out on a limb and hiring, they are basically sitting on their hands or actually firing people. I mean, on balance, that's what's happening."
Friday's report showed that U.S. employers cut about 308,000 people from their payrolls in February, the worst figure in 15 months. Canada, in contrast, gained 52,000 jobs, although it seldom bucks a U.S. trend for long.
Looking at surveys of small-business confidence and other data, Mr. Banerji does not doubt that people are hobbled by uncertainty about war.
"Right now we are on the cusp of a decision about which way the economy will go, and the outcomes are quite radically different," he said.
"We could go into a new recession, but we could go into a stronger economy if the war and the geopolitical uncertainties are resolved quickly and decisively and oil prices plunge. That is a possibility; I think people are getting increasingly pessimistic, assuming that won't happen, but it's still a possibility."
Allen Cox, an excavation contractor in Provo, Utah, sees the suspense about war as at least part of the reason his customers are delaying work. "They're waiting for something," he said. He himself is waiting to buy a new excavator and a new bulldozer. "I would buy tomorrow if I had a big job, but there's not the work there."
In Kansas City, Mo., Tim Basler is in charge of leasing space in Hunt Midwest SubTropolis, a warehouse and distribution centre a dozen storeys underground in a former limestone mine. (Slogan: "Close to the airport, downtown and quite possibly China.")
Business is slow, Mr. Basler said.
"It doesn't have anything to do with the underground per se. It's just that people are waiting to make any kind of decisions on large-ticket items like real estate. . . . Now whether it's on Iraq [or] whether it's on customer commitments, I can't say, but they are waiting for some kind of catalyst."
Back in Erie, Ray Benacci is a builder of warehouses, truck terminals and other commercial structures, but he is not building anything now.
"Even with these great interest rates, unless I have a signed contract and it's a very stable company, I'm not going to venture like I have in the past, putting up buildings and then going out and finding a suitable tenant," he said.
Economist Mr. Banerji said that if war breaks out, the economy will eventually get a boost from military spending, but not necessarily enough to save the day.
"Before that kind of thing can kick in, and that takes a little time, the danger is that oil prices will spike so much that we would be tipped over into a recession. That's the problem right now. ... Every recession in the last 30 years, essentially, has been triggered or worsened by an old price spike."
© The Globe and Mail
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