Investors and consumers outlooks in the US economy are being affected by the prospect of war, according to a leading US financial analyst.

Dr. David Resler, chief economist of Nomura Securities International was speaking to the Bermuda Society of Financial Analysts at their annual forecasting dinner on Wednesday.

Dr. Resler said the 1991 Gulf War showed that the build up to a conflict can have a more damaging effect on the world economy than the conflict itself. The Gulf War, he reminded the audience, only lasted several days.

In his presentation on how the US economy might achieve a sustainable recovery, Dr. Resler said retail sales are currently being affected by widespread "belt tightening" by households.

"At the moment consumer will not even look at purchasing something unless it is on sale because he knows it will be on sale tomorrow, " he said.

He predicted that growth would be slow in the first quarter of this year and would improve in the second half. Inflation will stay low and interest rates will edge upwards.