The outbreak of war in the Middle East would almost certainly send a shock through an already fragile U.S. economy. Oil prices would climb quickly. Stock and bond markets would gyrate wildly. Decisions and plans would be put off by people running businesses and households all across the country.

But whether such an economic ruckus lasts hours or months will hinge on what happens in the fighting, economists and financial analysts say.

A rapid triumph over Iraq without serious damage to oil facilities could boost consumer confidence and send oil prices tumbling below levels that prevailed before the Iraqi invasion of Kuwait. A military stalemate, coupled with an interruption in oil supplies, could plunge the economy into a deeper recession as inflation is ignited, interest rates climb, federal budget deficits balloon, real estate values plummet and consumer confidence collapses.

Initially, experts expect a period of confusion as people try to figure out the course of the fighting. How markets react at first could depend on what time of day war begins.

"If we wake up and find that the air war has already been decided, then maybe {the markets} won't go down that much," said Charles Lieberman, managing director of Manufacturers Hanover Securities Corp. "If the war starts during the working day, then it will be much worse."

"In the short run, it will lead to utter paralysis," said Frederick N. Khedouri, a managing director of the investment house Bear Stearns and a former official at the Office of Management and Budget. "Nobody's going to do anything because they won't know what to do."

"All decisions will be on hold," said Roger C. Altman, a former Treasury official and a partner at the Blackstone Group, an investment bank. "Capital budgets will be on hold. Consumers will stop spending."

To some extent, that paralysis has already begun and markets have already become jittery -- a reflection, say some, of the unusual economic circumstances on the eve of this war. Wall Street Is Not Raring for This Fight

The day after Pearl Harbor, the Wall Street Journal printed a front page article describing how war would help revive the United States economy. "War with Japan means industrial revolution in the United States," it proclaimed. Indeed World War II, like other wars, stimulated the economy for a time. The government borrowed more, spent more and increased the demand for goods and services, pulling the country out of economic doldrums.

But this time, the financial community dreads the economic consequences of war. Every time hostilities seem near, the stock market plunges. Wall Street is not spoiling for a fight that it believes will have few spoils.

"There is a three-letter difference here," said Robert D. Hormats, an investment banker at Goldman Sachs & Co. and a former senior economics aide at the State Department. "Oil."

No other war has threatened the lifeblood of U.S. industry. Hormats and other analysts predict that within 48 hours of the start of fighting, oil prices on spot markets could rise to $40 to $45 a barrel. If Saudi oil fields or supply lines are seriously damaged, they could go much higher still. The result, according to Nobel prize-winning economist James Tobin of Yale University, would be a period of stagflation -- little or no economic growth combined with brisk inflation.

War's direct effect on business would be mixed. Palmer Tube Mills, a small steelmaker in Chicago, could expect increased orders for casings it makes for tanks. But its energy costs would rise and a further economic slowdown could hurt its sales of structural steel tubing to the construction industry. "It is difficult to estimate" the effect war would have, said Ross Palmer, the company's chief executive.

Another difference between the economy on the eve of this war compared with previous wars is the enormity of the budget deficit even before the first shot is fired.

"Spending money for war is a way of getting out of recession, but it also increases the budget deficit," said Tobin. Even without a war, administration officials concede that the budget deficit could reach a record $350 billion in the current fiscal year. A shooting war could add between $500 million to $1 billion a day in Pentagon spending, with foreign contributions covering only a portion of those costs.

To some extent, financial markets have already adjusted for war risk. But David Hale, an analyst at Kemper Financial Services Inc., said that many investors, consumers and companies are anticipating a short and decisive conflict. A quick war without damage to oil supplies would help the economy, by removing uncertainty and boosting consumer confidence. But if the war drags on, it could send the already lackluster Dow Jones Industrial Average sliding toward 2,000 from about 2,500 and could push bond yields up half a percentage point or more to about 9 percent, Hale said.A Particular Sensitivity to Oil Prices

The economy is particularly sensitive to oil price movements. By some government estimates, every $10 jump in the price of oil cuts 1 to 1.5 percentage points from the economy's growth rate and adds 1.5 to 2 percentage points to the inflation rate. "That's more than $50 billion in lost output," said one administration official. "Obviously, we're talking about a large number of jobs."

In a prolonged conflict, some of those jobs could be made up by defense contractors, but economists have come to realize that, in an economic sense, not all jobs are created equal. Yale's Tobin notes that "in the long run, you don't get rich by fighting wars. They are diversions of resources from more worthwhile areas." Even though inflation remained low and growth robust during early years of the Vietnam War, economists now blame the war, in part, for the years of inflation that followed.

"Whatever additional contribution to {economic} growth there might be would not translate into an increase in the living standards of Americans," said Shafiqul Islam, a senior fellow at the Council on Foreign Relations. "It would be dissipated into means of destruction rather than means of consumption."