Crisis No Reason to Make Hasty Decisions

American investors and consumers are attempting to assess the long- and short-term effects of the political coup in the Soviet Union, as details about President Mikhail S. Gorbachev’s ouster continue to reverberate in financial markets.

Should individuals pull money out--or put money into--stocks and bonds? Should they delay or accelerate major purchases? Will they feel the pinch at the gas pump? Will the political upheaval affect corporate hiring plans or the overall job picture? Could it derail the nation’s already tenuous economic recovery?

Economists and analysts have few definitive answers, although they caution that consumers should not make precipitous financial decisions.

“There are more ‘what-ifs’ right now than answers,” said Ralph Bloch, a stock market analyst with Raymond James & Associates. Added Lincoln Anderson, economic analyst at Fidelity Investments in Boston: “I am not at all clear on what to expect. It is a fluid situation.”

The psychological jolt shook the world’s financial markets and led to a steep, but seemingly temporary, decline in U.S. stock prices. But, unlike their response during the Persian Gulf War, many consumers so far appear to be taking the news in stride.

A survey of 221 investors conducted on Monday night by Boston-based Fidelity Investments found that confidence has been only slightly shaken by the coup. About 32% of those polled believe that the economy will recover over the next six months. That is up sharply from the 5% who expected a quick economic recovery when polled by Fidelity in January in the heat of the Persian Gulf conflict.

And 89% of those surveyed thought the Soviet crisis would have little effect on economic growth. While 42% of those polled said they were concerned about the Soviet situation, a larger percentage--64%--were concerned about the federal budget deficit.

Industry experts maintain that consumers should not base their buying and investing decisions on what is happening in the Soviet Union.

“Don’t get caught up in this whole thing,” said Richard Bernstein, manager of quantitative analysis at Merrill Lynch in New York. “If you are a (stock market) investor, you want to use this opportunity to look for companies that have been unfairly beaten up and have nothing to do with this situation. You don’t want to buy cement companies on the theory that they’ll reconstruct the Berlin Wall.”

Those advising consumers on other investments--from mortgages to collectibles--echo the sentiment. Although some have speculated that the Soviet unrest could place more pressure on the U.S. government to lower interest rates, it is currently uncertain whether any such rate cuts are in the offing. Interest rate policy-makers met Tuesday night, but their actions--if any--will not be known until today.

Pressure has been building for the Federal Reserve to lower rates to ignite the nation’s sluggish recovery, economists noted. Inflation--the biggest deterrent to a rate cut--has been exceptionally low. And the Soviet situation, with its potential to derail consumer confidence and spending, could turn up the heat and spur the government to cut rates by 0.25 percentage point or more, some have speculated.

But if the Soviet situation gets bad enough, some believe that the interest rate picture could go the other way.

How so? The Soviets are major exporters of oil and natural gas. The U.S.S.R. is not as large a player as the countries involved in the Persian Gulf crisis, but the energy market is also tighter today than it was six months ago.

Although the United States does not import Soviet oil, an interruption in Soviet exports could disrupt the world market. That could have an inflationary effect on energy prices, said Mikkal E. Herberg, a political economist at Atlantic Richfield Co. in Los Angeles.

“The Soviets export about 2.5 million barrels of oil a day. If the turmoil caused problems with the production or transportation of the oil, you could end up with a lot less oil in the world market,” he said. “We are heading into a relatively tight season--fall and winter--and because of the Persian Gulf crisis, there is very little leeway in the market. The mere possibility of shortage has driven oil prices up a bit.”

Energy prices are a major component in the inflation picture because they affect the price of any good that must be flown or trucked or shipped to market, as well as the price of driving your car and heating your home, economists note.

Gasoline prices have been on the rise for the past three weeks, according to the American Automobile Assn. in St. Paul, Minn. However, it is too early to tell whether they will be affected by the Soviet situation.

However, the biggest question for U.S. investors is whether the Soviet situation could so damage confidence that businesses and consumers would find it necessary to scale back. That, of course, would have a negative effect on the job picture and could derail the already tenuous economic recovery that seems to be under way.

“If the consumer now gets cold feet, you could have a double-dip recession,” said Michael Metz, stock market strategist at Oppenheimer & Co. in New York.

At this point, most experts believe that is unlikely. Nevertheless, political unrest is bad for investors and the economy as a whole.

“It is certainly not a positive,” Metz said. “The real question now is how negative is it.”