A cold, or full-blown pneumonia?

The old adage is that when America sneezes, Europe and Asia catch a cold. Now retail, fashion and luxury goods executives worldwide are trying to figure out whether those regions are going to need large and continual dosages of NyQuil as a result of the U.S.’ financial turmoil.

On Tuesday, initial signs weren’t good as Asian markets fell, but things improved later in the day as shares in Europe and the U.S. rebounded on hopes the U.S. government’s $700 billion rescue package could be salvaged in the House of Representatives. The Dow Jones Industrial Average and the Standard & Poor’s Retail Index rose 485 points and 12.02 points, respectively, following the previous day’s panic-stricken declines. The Senate remained in session Tuesday and today over the Jewish holiday to continue to hammer out a deal on the bailout plan, but the House adjourned and will reconvene on Thursday.

As uncertainty continued to rage, fashion and retail executives generally tried to remain upbeat, while admitting the difficulties ahead.

“The damage in the financial world is huge. We will feel an impact,” said Francesco Trapani, chief executive officer of the Italian luxury jeweler Bulgari SpA. Trapani added Bulgari had already noticed a slowdown in the U.S. and in certain European countries, and that cost control was going to be increasingly important.

“We will invest less in advertising. People aren’t receptive to it right now. Our advertising in the last quarter will be pretty slim,” he said, adding the high end of the market — usually the most resilient — would also face a slowdown. “A lot of people are losing a lot of money,” he said.

Interviewed on the sidelines of the runway shows in Paris this week, American retail executives held out hope for a bailout plan, and voiced concern about the endless flow of bad news.

“I’m optimistic, and hopefully they’ll come to some kind of agreement in the next couple of days,” said Stephen I. Sadove, chief executive officer of Saks Inc., parent of Saks Fifth Avenue. “We’ve got a risky situation and the consumer is paralyzed. The consumer doesn’t do well with volatility: Their shopping patterns are very tied to how they feel about their net worth and financial situation. It’s a very difficult time.”

Pete Nordstrom, executive vice president and president of merchandising at Nordstrom Inc., agreed. “There’s so much uncertainty right now,” he said. “It’s fair to say uncertainty is not good for business. But we’re all here; we’re doing our jobs and doing our best.”

“We’re watching the developments as closely as anyone,” Burt Tansky, president and ceo of Neiman Marcus Group, said at Jean Paul Gaultier’s show in Paris Tuesday night. “We are very concerned that all of this will reach into our customer’s interest in shopping. We hope a solution is found so the banks and the financial community can move on in a positive way and the customer can settle down and start thinking about fall shopping and the holiday season.”

And Americans aren’t alone. The financial crisis in the U.S. threatens to rattle an already fragile Japanese economy many believe is heading into a recession. On Tuesday, the Japanese government said consumer spending fell 4 percent in August from a year earlier. Department stores have been hit particularly hard. Earlier this month, Takashimaya Co. Ltd. issued a profit warning and rival Isetan Mitsukoshi Holdings Ltd. revealed plans to shutter six stores in Japan.

Harrison Bates, an analyst with KBC Securities Japan, noted how inflation has outpaced Japanese wages, stripping consumers’ spending power and convincing more people to hang out at home rather than travel or make big purchases. The U.S. crisis certainly won’t help the situation.

“If it affects exports, it eventually affects people’s jobs,” he said.

Noboru Ikeuchi, a senior research at Tokyo’s Yano Research Institute, said he hasn’t seen any signs of consumer recovery in Japan — a key market for luxury goods — and warned conditions will probably worsen next year. Many Japanese consumers, not just wealthy ones, have invested in securities and other market instruments as Japan’s state-run pension system comes under strain, he noted.

“The one light retailers see is from the foreign tourists from China and elsewhere coming into Japan,” he said.

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