U.S. ponders economic outlook after Soviet coup

August 20, 1991|By Michael Dresser

Don Hoatson recalls that during the last world crisis, as the United States edged closer to war in the Persian Gulf early this year, sales in his Pikesville stereo equipment store fell "way off, drastically off."

But the latest crisis, a Soviet military coup that toppled President Mikhail S. Gorbachev, doesn't faze him. Without American lives on the line, "I think this thing in Russia is going to be viewed as more of a distant thing," Mr. Hoatson, owner of the Listening Room, said yesterday.

Mr. Hoatson's relaxed view of events in the Soviet Union isn't shared by all economic observers. Some are openly worried that prospects of Soviet civil war and a renewed Cold War could erode consumer confidence and endanger an already-fragile recovery. But, by and large, stock market analysts and big-time retailers are betting that Mr. Hoatson is right.

"It'll have some effect, but it's not going to have the effect of the Iraqi war," said Kenneth M. Gassmann Jr., a retail analyst with Richmond, Va.-based Davenport & Co. "We're entering the back-to-school period," he said, and "kids are not sensitive" to world events.

At Giant Food, a spokesman, Barry Scher, was succinct. "I can't think of any impact at all," he said.

William L. Paternotte, director of research at Alex. Brown & Sons in Baltimore, agreed that the likely impact of the crisis on the U.S. economy would be negligible. The number of companies that depend on trade with the Soviets is small, he said.

Mr. Paternotte said that to the extent that the crisis strengthens the dollar, which was sharply higher in world markets yesterday, "that tends to help [cut] interest rates and is a plus for the economy."

But Tal Daley, vice president and market analyst with Legg Mason Inc., is concerned about the effects of the crackdown. "The recovery doesn't need any shock," he said.

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