Terrorism is an economic worry

By Tom Stundza -- Purchasing, 9/6/2006 7:34:00 AM

Terrorism is seen as the biggest short-term problem facing the U.S. economy, according to the latest survey of 195 economists by the National Association for Business Economics (NABE). Terrorism was identified as the key issue to watch by 34% of respondents, up from 26% in the last poll in March. Energy was the biggest fear of 29% of respondents, up from 23%. Inflation fears moved into third place, ahead of the U.S. trade deficit. Some 71% of respondents say current monetary policy is about right, but the economists are split on where the Fed should go next. A total of 29% want further rate hikes, 17% want cuts, and 53% prefer to leave rates at their current level. At an August 8 meeting, the Fed kept the benchmark U.S. interest rate steady at 5.25%, the first time since mid-2004 that the central bank had not increased borrowing costs.