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Consumer unsettled by crash


DOBBS: Economist Lakshman Achuthan believes consumer spending is the key to economic recovery. After today's crash, he says people will feel even less confident, of course, regardless of what is ultimately determined to be the cause of that accident. Good to have you here.

LAKSHMAN ACHUTHAN, ECONOMIC CYCLE RESEARCH INSTITUTE: Good to be here.

DOBBS: Just when the airline industry seemed to be moving ahead, this crash. We heard Ray Neidl say that basically, this is a setback of enormous proportions for the industry. Phil Condit, the CEO of Boeing, saying it could take as long, even more than three years for the industry to recover. What is your best assessment?

ACHUTHAN: Well, for the industry or for the economy?

DOBBS: For its impact?

ACHUTHAN: For its impact? I'm concerned about consumer and consumer confidence, because we have lot of stimulus introduced into the economy. The consumer is holding it up a little bit. And the confidence is needed to release that into the economy. We had a cumulation of non-events. And of course today, we had an event that is going to weigh on confidence.

DOBBS: And business investment itself? Instead of putting all of this on the consumer's back...

ACHUTHAN: Right, well, the businesses have been on hold for a while.

DOBBS: Right.

ACHUTHAN: Because they -- there's a lot of capacity in the system. And they're unlikely to begin or to add to their capacity until they see the consumer coming back. That's why the consumer is particularly under the gun.

DOBBS: Looking at a number of these industries, but focusing on the airline industry, if we get a bankruptcy there, business spending remains in decline in point of fact. How likely is recovery next year?

ACHUTHAN: Recovery can still come, even if you have bankruptcy or further consolidation. This is what happens during recessions. The recovery will come, guaranteed when the consumer confidence comes back. That's key.

DOBBS: When's that happen?

ACHUTHAN: Not for the couple months, not there.

DOBBS: OK. I think most people will sign up for that anyway. Thanks.

ACHUTHAN: Lou, sign up anyway.

DOBBS: Thanks.
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