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Wounds must heal before U.S. recovers

Published Sep. 10, 2005

Reviving the flagging U.S. economy will take more than lower interest rates and ramped-up government spending, says Conference Board economist Delos Smith. He says attempts to stimulate the economy won't help until Americans start feeling better.

"People are still numb," Smith said in an interview Tuesday during a visit to St. Petersburg. "No one wants to do anything. We need some quiet healing time. You can't really speed up grieving."

As senior business analyst for the Conference Board, an influential business networking and research group, Smith spends half his time on the road. Unlike the corporate chieftains he advises, Smith travels by Greyhound bus when he can to get a better feel for changes taking place across the U.S. landscape.

But these days he can offer his audiences no timetable for economic recovery. In the midst of terrorist attacks, anthrax scares and war in Afghanistan, he said, psychology is probably a more helpful tool than history.

"The economy is part of a social system and there is a tear in the social fabric," he said. Smith, 66, said that has left many Americans fearful, nervous and angry.

"A significant minority of the population freaking out has enormous implications," he said. People simply do not feel like shopping, eating out and taking vacations, he said.

Even the Conference Board canceled its traditional holiday party.

"It just didn't seem appropriate," he said. "Obviously the restaurant we would have had it in suffers."

What's the recipe for recovery?

"If the news in Afghanistan is good, if we can catch Bin Laden, if we can find the anthrax culprit, people will feel better," he said. "We are a law-and-order society, and we feel justice is very important."

He said job losses also must level off before consumers can feel really confident once again.

Smith was in St. Petersburg Tuesday to talk with members of the American Association of Individual Investors as part of a swing through Florida.

_ Helen Huntley can be reached at or (727) 893-8230.