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msnbc.com

Even a quick and decisive military victory in Iraq is unlikely to shake consumers out of their doldrums because the struggling economy is still the No. 1 concern of most Americans. That is the conclusion of a leading market research firm that advised clients Thursday to begin planning for war by recognizing the new age of anxiety.

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“The prospect of war with Iraq is not a sudden event that has pushed consumer mood off a cliff,” said J. Walker Smith, president of Yankelovich Inc.

“Instead the prospect of war with Iraq is just one more thing in a big pile of things weighing on consumers’ minds,” he said. “In fact, the prospect of war with Iraq is not even the most important thing on people’s minds nowadays. At the top of the pile is the economy — particularly job security.”

Financial market analysts and economists were shocked this week by a report that consumer confidence plunged nearly 20 percent in January to its lowest level in more than nine years. The decline of nearly 15 points in the Conference Board index was the second-biggest ever, topped only by a downturn after the September 2001 terrorist attacks.

Increasing global tension over Iraq clearly was a major factor in last month’s decline, but Smith said consumer confidence has been dropping steadily since 2000, interrupted only briefly by a “rally effect” after 9/11 that quickly was dashed by waves of corporate scandal.

“There is no evidence to suggest that war worries are the one thing depressing the consumer mood,” Smith said. “Economic worries are the real problem.”

And he said there is no reason to think that a quick victory in Iraq will provide a “turbo boost” to either consumers to the economy, he said in a conference call with corporate marketing executives, which was opened to the media.

“It’s risky to assume that a quick, decisive victory over Iraq will reverse the anxiety we see among consumers,” he said. “Anxiety is the new normalcy. Anxiety is the undercurrent to everything we see in people’s opinions and behaviors.”

Economic worries constant
Yankelovich, based in Chapel Hill, N.C., is respected in the advertising and marketing industries for its 30 years of research into consumer motivations and attitudes. It is perhaps best-known for pigeon-holing consumers into memorable segments like “realists,” “new traditionalists” and “individualists” — handy tags for mass-marketers trying to shape and direct corporate or even political messages.

Based on its own research and other public opinion polling, Smith has concluded that rising anxiety and slumping confidence has its roots in the late 1990s and accelerated with the stock market slide that began in 2000, the terror attacks of 2001 and finally the wave of scandals that peaked last year.

While war has become a topic of increasing concern among survey respondents since last fall, concern about the economy has remained steady at the highest levels in a decade. And in an Internet survey Yankelovich conducted over the weekend, “almost nobody” said the prospect of war in Iraq strengthened their confidence in the future, Smith said.

Even if U.S.-led forces score a quick victory in Iraq with few complications, the most likely response among consumers would be a brief period of elation, after which confidence would fall back roughly to where it was late last year — which is to say depressed, Smith said. He said it is a “long shot” to hope that a victory in Iraq leads to a steady, sustained increase in business investment and hiring, which would allay consumer job fears.

That does not mean the economy is headed back into recession. Consumers have been spending heavily even on big-ticket items like houses and cars throughout the latest period of slow growth, and despite tumbling confidence. But Smith points out that for marketers it is increasingly expensive to reach consumers and convince them to spend.

“The only thing that consistently has been able to get people to the store is a deal that is literally too good to be true,” Smith said. “Needless to say this adds to the cost of doing business.”

Smith’s message to his clients was clear: In the event of a war, marketers should continue advertising although they should avoid inappropriate messages that exploit people’s fears or try to ride a wave of patriotism.

Understandably, many advertisers will want to avoid juxtaposing their message with images of war, but marketers still should be able to find opportunities to offer solution to people’s needs and problems.

“Consumption is a fact of life under any circumstances - peace or war,” Smith said. “We need to offer consumers support and encouragement that shopping and spending are still OK. … As crass as it sounds, at some point we must eventually return to asking for the sale.”

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