For the first time since the Great Patriotic War (Second World War), the industrial sector in the USA has registered a downturn for 12 successive months, a fact which may be attenuated by a prolonged war.
The comments of President Bush as he left the USA for the Asia-Pacific Summit pointed exactly to this: “The war could last more than two years”. The September 11th attacks had a direct effect upon sales, production and travel, the main victims being the airlines.
However, the financial markets are reacting much better than expected and a return to normality seems to have been achieved. Roger Ferguson, Vice President of the Federal Reserve Bank, said that expenditure seems now to be recomposing after an initial downturn. “Monetary policy has reacted and will continue to react, in a fast evolutionary process”, he said.
This has led analysts to believe that there could be a further cut in interest rates by the Fed, although experts claim it is still too early to predict with any accuracy consumer and company behaviour and how to balance monetary and budgetary policy. The Fed has lowered the interest rate, which now stands at 2.5%, nine times this year. This is the lowest it has been since May 1962.
John ASHTEAD PRAVDA.Ru LONDON UNITED KINGDOM