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These assumptions have essentially been borne out, although “relief rallies” in financial markets have been limited by uncertainties over the whereabouts of Saddam Hussein and his immediate circle, as well as by the failure to find convincing evidence of those “weapons of mass destruction” on Iraqi soil. Furthermore, other trouble spots have popped up in the Middle East (particularly Syria), and the task of establishing a stable and friendly Iraq after the hostilities obviously is daunting.

These issues are preventing a quick and strong snap-back of confidence and spending behavior, particularly among American businesses. But it’s still likely that things will improve on this front by mid-year — barring another major shock from the Middle East or elsewhere.

The SARS outbreak, emanating from Hong Kong and southern China, could have frightening impacts on the global economy, but it’s much too early to assess the implications for the U.S.

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