Victory's Dividend

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When Johnny comes marching home, will the rest of us celebrate by tramping off to the mall or auto showroom? Business-people and investors across America are pondering that question, trying to balance widespread forecasts of at least one more recessionary quarter against the euphoria of a swift battlefield victory. Does peace mean prosperity? If the gulf war didn't start this recession, what role will Kuwait's liberation play in ending it?

War, not peace, typically stimulates huge demand for goods and services. That didn't happen this time, in part because this war was fought mostly with stockpiled off-the-shelf weapons and munitions. Now a growing number of economists and businesspeople are predicting, suggesting, hoping -- praying -- that the cease-fire will trigger an improvement in the economy by boosting consumer confidence and spending. "Peace is a jump-starter," says John Tuccillo, chief economist of the National Association of Realtors. "This is the catalyst that can get the thing cooking. It's not the whole story, but it is a spark, and that's important because this is an economy that needs a spark."

No experts are foolish enough to predict that peace will obliterate America's severe economic woes -- its mountains of debt, its banking crisis, its depressed real estate market. But a consensus holds that peace and national pride will at least erase the preoccupation with war and TV bulletins that has turned the slush of a winter's recession into a frozen economic tundra. Among the areas showing signs of a peace-prompted thaw:

Consumer Confidence. It plunged after the gulf crisis began and in January finally dragged consumer spending down with it. That's important because such expenditures account for two-thirds of America's economy -- so it's heartening that confidence suddenly reversed course in February, posting a small improvement. For the first time in five months, the closely watched monthly consumer confidence index of the Conference Board, a business research group, rose 2.6 points, to 57.7. That's still way below last July's 101.7, but it's a start. It also fails to reflect consumer reaction to the cease-fire, which was announced after the survey was completed. Says economist Paul Erdman: "The American nation refound its confidence on the Persian Gulf battlefield. That confidence is seeping down into the national psyche and could help bring on an economic renewal. The war showed we don't have to play second fiddle to anybody, that we don't need the Germans and the Japanese to help us accomplish something."