War and the Art Market – artmarketblog.com
As the first major conflict involving the United States after the Cold War, the Persian Gulf War was always going to be an unsettling event for the US. The beginning of the US involvement in the Persian Gulf conflict began in January 17 1991 when coalition forces began a massive air attack on Iraqi targets codenamed Operation Desert Storm. By the 28th of February 1991 the Iraqi resistance had collapsed and Kuwait had been recaptured which fulfilled the goals of the coalition resulting in a cease-fire.
Although the United States’ involvement in the Persian Gulf conflict was relatively short, it did happen at a time of great economic uncertainty and at a time when people were seriously questioning the long term viability of the art market. According to the University of Michigan consumer sentiment index, US consumer confidence dropped from 88.2 in July of 1990 to 63.9 in October of 1990. Interestingly, it wasn’t so much the beginning of the involvement of the US in the war that triggered the drop in consumer confidence but the period of uncertainty before the US made their move in February 1991 in response to Sudam’s invasion of Kuwait.
Because of the reliance on the Middle East for the supply of oil, there was an even greater perceived threat to the wallets of gas guzzling Americans that contributed to the reduced consumer confidence. The difference between the current situation with oil and the situation with oil during the Persian Gulf War is that the current high prices are being caused by a general increase in the consumption of oil whereas the Persian Gulf War posed a direct threat to the production and supply of oil. We are currently aware of the situation with oil which, although problematic, is relatively predictable whereas the potential effect of the Persian Gulf War on the supply of oil was an unknown. When ever there is an unknown people tend to want to prepare for a worst case scenario and rightly so.
If the Persian Gulf War had of been the only factor affecting people’s financial situation and their confidence in the future of the economy I doubt that the war would have had such an impact on the art market which, although small, was one of many untimely events that were detrimental to the art market. What I think the situation with the art market and the Persian Gulf war shows is that economic and financial uncertainty is potentially a far greater problem for the art market than an actual financial or economic movement.
To be continued…
See the other two posts on this topic here:
**Nicholas Forrest is an art market analyst, art critic and journalist based in Sydney, Australia. He is the founder of http://www.artmarketblog.com, writes the art column for the magazine Antiques and Collectibles for Pleasure and Profit and contributes to many other publications.