Worried about the economy? Concerned about your job security or the falling value of your house? Then go out and buy that wide-screen television you've been hankering after, or splash out on that expensive watch that's been calling you from the jewellery shop window.

According to top US economist Ms Lara Rhame, it'll be the best thing you can do if you want to do your bit in getting the numbers back on track again. She even reckons that the powers-that-be should be out on the streets, spreading the word on consumption.

"At these times, the best thing you can do for the economy is to buy something frivolous like a DVD player or a pretty necklace. In some ways it's the thing people feel least comfortable doing because they feel that it's crass.

"We think politicians should go out and tell everyone to shop," she says.

Ms Rhame, an international strategist with Brown Brothers Harriman in New York, is not joking. When consumers make up two-thirds of your recession-bound economy, she says, it's important to drag your citizens away from their television sets and out into the shopping malls if you want recovery to happen. This "TV effect" has been powerful in the last month, she says, comparable only perhaps to the assassination of John F. Kennedy in terms of unifying the nation.

Unlike many of her peers, Ms Rhame had not succumbed to outright pessimism before the September terrorist attacks, believing the American consumer would support the economy through its troubles. Even now, she's predicting a recovery in the first quarter of 2001, although the fourth quarter of this year could see growth dip by - 1.5 per cent.

"What we had seen in the US for so long was the consumer staying very strong when business spending had been really falling a lot. Everyone was really holding their breath to see if the consumer would hang in there for enough time for investment spending to get going again. Until the attacks happened, I had actually been very confident that we would be able to avoid a recession in the US," she says.

Behind the scenes however, problems that would dent this confidence were already growing.

"In August, I was very disappointed by data that was coming out of the US and even if the attacks had never happened, we were already writing about this.

"One of the things that disappointed me a lot was August retail sales - we saw spending that was still very weak, even though we had this $38 billion tax package and people had a lot of money in their pockets. Clearly everyone was saving it: they didn't increase their spending, they increased their savings and the savings rate increased by 1 per cent to 4.1 per cent.

"We've seen investment spending make no motion towards picking up, so it looked pretty dismal. That was going into this."

And the picture isn't about to get any brighter. The housing market - the epitome of confidence until September - could be in the middle of a 10 per cent drop, says Ms Rhame. She warns that as many as 400,000 US jobs could be lost this month, or double the number for September, meaning that even those who will secure jobs could become nervous.

It all adds up to a lean winter of negative growth, despite recent suggestions from the University of Michigan that consumer confidence was on the rise once again. Ms Rhame argues that just because the American public might be more positive in October than they were in September, it's still relative.

She even dismisses this week's news of healthy car-sales figures as relatively meaningless, based as they are on heavily discounted offers from manufacturers.

"I think that's where you can get into a fine line between a sort of patriotic rally in confidence - and does that really translate into people actually going out and spending. I don't think anyone is expecting spending to pick up; everyone's expecting it to fall - the question is, how far down does it go? Does it just fall for a month or two and come right back again or does it fall and really stay low? In my mind, I actually think that we're in for a more prolonged downturn."

Again, however, Ms Rhame is not as pessimistic as some of her peers, particularly those who expect to see alarming falls and equally sharp rises towards the end of next year - the terrifying "V" curve. Ms Rhame's view is more measured: she expects US growth to reach between 2.5 per cent and 3.5 per cent by the fourth quarter of 2002 and dismisses pictures of a "frothy" economy.

The recovery will be achievable even amid job losses and increased negativity, she says.

"Unemployment is going to move from 4.9 per cent to close to 6 per cent over the next six months. You really have to remind people though that since the 1950s we've had many instances of having an unemployment rate of 6 per cent and [AN ECONOMY] still growing by 3 or 4 per cent. We'd be thrilled right now to have 3 or 4 per cent growth. That would be spectacular. It's a question of whether we can get to that new state in the economy without consumers getting panicked and shutting down."

The answer, Ms Rhame believes, will come from the US political leadership, a team that she says has so far helped to keep the economy from darkest recession using both psychological and financial means.

She says that the $15 billion (€16.5 billion) "airline bail-out", much criticised by EU Transport Commissioner Ms Loyola de Palacio, combines both factors.

"The compensation is atypical in some ways because it goes against this government's desire to be more hands-off, letting markets take their free rein," she says.

"I think they feel that they need to keep the airlines flying. From the US psychology side of things, travel has been so badly damaged that they needed to keep the planes flying overhead." According to Ms Rhame, it is this "psychology" approach that should convince the EU Commissioner of the special case for US airlines. She says that this is about more than saving a doomed enterprise, and points to the lack of compensation for other troubled sectors, such as insurance, as support for this theory.

"They'd rather have airlines flying, heavily discounted and getting people back in the seats than to have airlines not flying at all and Disney World having an awful quarter and laying off all the Mickey Mouses," she says.

The fact that the government had the capacity to aid the airlines to such an extent should be interpreted as a positive sign, according to Ms Rhame: "What people don't realise is that the government has a huge amount of room to open the floodgates in terms of stimulus."

Ms Rhame says that policymakers are discussing further economic intervention worth between $50 billion and $75 billion, although the exact destination for this money has yet to be decided. Business investment incentives could be a likely candidate and cuts in capital gains tax have also been mooted, perhaps to be implemented as soon as Thanksgiving.

Ms Rhame is predicting a tax rebate to low-income households, "where marginal propensity to spend is much greater" .

She warns, however, that excessively stimulating fiscal measures should be avoided if US growth is to be smooth next year.

In the bigger picture, Ms Rhame is not predicting a "world reordering of investment or a major flight of money out of the dollar and into other currencies such as the euro," despite the "heightened period of global risk-aversion".

She nonetheless expects the euro and dollar to be trading at parity towards the end of this year, news that will help to diminish inflation in the euro area but will be bad news for European exporters.

Admitting that such a development will rely largely on indicators coming from Germany and France, she still expects Europe to have the strongest growth in the world next year, taking into account two quarters where negative growth will be "skirted".

The recently bolstered credibility of the European Central Bank (ECB) will have a part to play in staving off the gloom on this side of the Atlantic, according to Ms Rhame.

"We were at a place before where Duisenberg and ECB's credibility was bad and that was hurting the euro as a currency. I don't think that's the case anymore. You can't say that anything good has come out of the September 11th attacks but the thing you are able to say is that it has pushed the ECB to doing what it should've been doing all along, which is cutting rates and being aggressive on the rate-cut front.

"And now that inflation is falling, I think that the euro may enter the virtuous cycle that the Fed was in where you see rate cuts translating into a strong economy, a strong euro, which means more rate cuts. It's what the dollar had at the end of the 1990s but doesn't have anymore."