Massachusetts-based Global Insight, Inc. said that a "long war" of up to six months would likely mean US economic growth would be as low as 1.0 percent, from a current "baseline" forecast of 2.6 percent growth in 2003.

A long war would also extend the slump in US manufacturing to a third year.

"It would also be disastrous for the airline and travel industries, where difficult conditions have been the norm since the September 11 attacks," the report said.

The greatest impact of a longer war would be seen in US consumer spending, the report said, which has kept the US economy afloat for the past two years.

"Prior to the war, an increase of 2.4 percent in 2003 was forecast," the report said. "However, in the long war scenario, depressed consumer confidence and continuing uncertainty in the job market could limit this gain to only 0.5 percent.

This in turn would have a tremendous effect on consumer manufacturing and services industries. Major consumer items such as motor vehicles, furniture, appliances, carpeting and other durables would see sales decline."

Reduced consumer spending resulting from a long war would create a "trickle-up" effect throughout the US industrial sector, the forecasting firm said, with slowing demand for steel, aluminum, plastics, textiles, and wood products.

But the forecasters said they were still optimistic that the war would end soon, which would be positive for the economy.

"We attach a 70 percent probability to our baseline scenario that the war in Iraq will be short and successful for the US and the coalition, " said Joseph Kasputys, Global Insight's chairman and CEO.

"While a longer war would make the near-term outlook for US industries more difficult, even in this scenario the economy should quickly regain its momentum once the conflict has ended."

SPACE.WIRE