NEW YORK CITY-The question no longer is what will happen to the economy if we factor in Iraq. The question should be what if we don't. That's how certain Mark Zandi, chief economist for Economy.com, is that war will happen. But war may actually bring about certain spurs to the economic environment, Zandi told a gathering Wednesday. In fact, he was less enthused about the impact of President George Bush's stimulus proposals on the GDP. In a presentation before the New York Chapter of the Counselors of Real Estate, Zandi discussed the war, the proposals and the GDP–and predicted how these would impact real estate in the long term.

The economy is actually growing, he noted, and the underlying fiscal conditions are good. Growth is simply not occurring fast enough to create new jobs. As a result, “investor, business and consumer confidence is flagging, and it is all tied in to the pending war.”

Those positive underpinnings include resilient productivity growth and continuing benefits from equipment, software and space investments made around Y2K–remember that? Additionally, since “the economic life of those Y2K investments is now eroding,” he said, “businesses are under pressure to re-invest.” Of course, low interest rates were also credited with “keeping the economy together.”