How Will Osama bin Laden's Death Affect the Economy?
Following President Obama’s announcement that an elite team of Navy Seals found and killed Osama bin Laden in Pakistan, an encouraging change rippled across the economy. Here were the initial numbers:
- The Dow Jones Industrial Average rose 44 points, or 0.3% to 12,854
- Standard & Poor’s index rose to five, or 0.4% to 1,369
- NASDAQ’s composite index rose to eight, or 0.3%, to 2,882
- CAC-40 (France) rose 0.3% to 4,118 and DAX (Germany) rose 0.5% higher to 7,554
- Global Oil prices fell 2%
Soon after the initial market rise, however, Rueters reported fading numbers.
- The Dow went down 0.03%
- S&P down 0.08%
- Nasdaq down 0.2%
“U.S. stocks were little changed on Monday as a bounce on news of Osama bin Laden’s death gave way to returning worries about geopolitical risk,” wrote Caroline Valetkevitch, a Rueters writer.
Analysts said bin Laden’s death may not affect the world economy or other geopolitical worries, but it may have helped investor sentiment.
“His death should not have affected the markets much … (but) just people feeling a little better about the world sometimes impacts the stock market,” Bryant Evans, investment adviser and portfolio manager at Cozad Asset Management, told Reuters.
Bob Coleman, the editor of the Coleman Report wrote:
“Despite the initial knee-jerk reactions, analysts say the markets will soon turn toward more fundamental matters for direction, such as the state of the global economic recovery and how central banks respond to the threat of higher inflation. Regardless of the definable impacts shown by statistics and figures, the impact on the general disposition of Americans will undoubtedly stimulate our economy.
“It is all a chain reaction: With bin Laden dead, millions of appropriated military spending is saved, the number of troops we have over seas can be reduced, our military’s use of oil and gas will decrease thus lowering prices here at home, lower gas prices initiate more consumer spending, more consumer spending stimulates small businesses, stimulating small businesses leads to a better economy, and that is the ultimate goal.”
But other experts and analysts say “curb your excitement, the death of bin Laden is not a major economic impact.”
James William, an energy economist at the oil and gas consultancy WTRG Economics told CNN:
“It’s very difficult to see how this event will fundamentally change supply or demand for crude oil. This seems like a gut reaction to what the West views as a happy event. A lot of times we see markets move on happy news that in reality has nothing to do with the market, and I think this is one of them … More violence in the Middle East probably means less oil.”
But what do you think? When you saw the gatherings at the White House and Ground Zero in New York, what was your feeling? How do you think bin Laden’s death will affect our economy? How will it affect your business?